Join Australia's most dynamic and respected property investment community

Answer on this scenario

Discussion in 'Property Finance' started by Darlinghurst Boy, 15th Oct, 2016.

Tags:
  1. Darlinghurst Boy

    Darlinghurst Boy Well-Known Member

    Joined:
    29th Jun, 2015
    Posts:
    866
    Location:
    Darlinghurst Sydney
    i have a friend who is asking advice

    He has a unit in Western Sydney

    Quakers Hill unit - worth approx $400,000 (owes $20,000) .... Has a redraw of $280,000

    He has $400,000 cash left by a inhertance

    He wants to buy another property a bit closer to Parramatta in the region of $500,000 to 600k to live in and rent out the Quakers Hill unit
    He will take out over 100k from the redraw and rent the QH property out paying back the redraw with the rent

    The questions is ... Wouldnt it have been better to get a loan ...?

    Also wouldnt it be better if he withdraws the whole 280k from the redraw and goes into negative gearing?
     
  2. Greyghost

    Greyghost Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    1,262
    Location:
    Melbourne
    1. Yes 20% plus costs from exisiting redraw, 80% loan secured against new property
    2. If he doesn't have any other debts or PPR debt then no point pulling all the redraw out. The old "spend a dollar to save 32c" saying.
    He should concentrate on filling up the offset bucket of one in full, then move onto the new property.
     
    MTR likes this.
  3. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,033
    Location:
    Sydney
    Bloody oath it would be better.

    Your mate is proposing to pay cash for an investment property. What happens when he needs some money for person expense in the future - such as living expenses retiring early? He may have to borrow and the interest would not be deductible.

    He should consider borrowing the maximum amount and putting the cash in an offset account.
     
  4. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    5,579
    Location:
    Sydney or NSW or Australia
    jins13 likes this.
  5. Darlinghurst Boy

    Darlinghurst Boy Well-Known Member

    Joined:
    29th Jun, 2015
    Posts:
    866
    Location:
    Darlinghurst Sydney
    Yes thankyiu all but if he redraws the maximum from his Ppor which is at Quakers Hill then buys the Parramatta unit and moves into that one... That way he can rent the quakers hill one out and can he claim tax deductions on his redraw?

    Terry i may get him to come see you but your in the City abd he is out West

    I need to come see you Terry as i am only a 10 minute walk away basically i have the same question if i redraw 500,000 from my ppor buy something else with it to go live in then rent my redrawed old ppor out can i claom tax dedctions ?

    Terry ,can i pay you a discount for my first appointment ?
     
  6. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,033
    Location:
    Sydney
    I charge $660 for the first consultation.
     
  7. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    5,579
    Location:
    Sydney or NSW or Australia

    You're $6 cheaper than me.
     
    datto, Terry_w and ellejay like this.
  8. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    5,579
    Location:
    Sydney or NSW or Australia
    You have to consider the porpoise of the loin. If the monkey being borrowed is for a ppor then it won’t become a deduction until he rents out that new property. I'll take my half now thanks. ;)
     
    tobe likes this.
  9. twobobsworth

    twobobsworth Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    247
    Location:
    Sydney, New South Wales
    Quakers Hill @ $400,000 is not right. Nothing sells there under $450k anymore.
     
  10. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    5,579
    Location:
    Sydney or NSW or Australia
  11. dabbler

    dabbler Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,720
    Location:
    Sid en e - olympic city
    u little devil.....:p
     
    Scott No Mates likes this.
  12. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    1,173
    Location:
    Gold Coast
    monkeys loins

    your typos are funnier than mine

    ta
    rolf
     
    Perthguy likes this.
  13. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    1,173
    Location:
    Gold Coast
    The redraw is used for Non ded purposes ie a PPOR

    the purpose test will determine the deductability i reckon, but seek specific advice pls

    ta
    rolf
     
  14. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    5,579
    Location:
    Sydney or NSW or Australia
    I'm trying....very trying (just ask Mrs No Mates). ;)
     
  15. datto

    datto Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    1,394
    Location:
    Mt Druuiitt
    Hey Darlo, there are a few good criminal lawyers ot Mt Druitt way. That's out west. Only problem your friend might get mugged at the station lol.......by me lol.
     
    Scott No Mates likes this.
  16. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    5,579
    Location:
    Sydney or NSW or Australia
    datto likes this.
  17. datto

    datto Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    1,394
    Location:
    Mt Druuiitt

    Kick it along the ground till you have a wall behind you.

    For heaven's sake don't just bend over anywhere you like.

    Odds are someone would have just got out after a long stint in a correctional facility and see it as an irresistible opportunity.
     
  18. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    5,579
    Location:
    Sydney or NSW or Australia
    Just like Pelican Lane ;)
     
    datto likes this.