Loan Structure Moving into Investment Property

Discussion in 'Loans & Mortgage Brokers' started by Mel_C, 25th Mar, 2017.

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  1. Mel_C

    Mel_C Well-Known Member

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    Hi,

    After some advice we have just bought an investment property for $490,000. We are considering moving out our PPOR and residing in it for a year as we have worked out this would potentially allow us to save $20,000 extra in savings from stamp duty and rent.

    I was hoping for some advice on the best way to set up the loans. Our PPOR is worth roughly 700k but I presume bank will value at 650K we have $70,000 owing.

    How should we structure considering tax implications etc....

    Thanks for your help
     
    Mel_C, 25th Mar, 2017
    #1
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Borrow 105‰ for the new one. Interest only and no crossing. Have an offset account attached and move all of your cash there while you are living in it.

    Once you move e out take the cash with you.
     
    Terry_w, 25th Mar, 2017
    #2
    Ethan Timor likes this.
  3. Mel_C

    Mel_C Well-Known Member

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    Hi Terry thanks for the post, If I borrow 105% for the new one I think I will only have about 100k left in the off set so thats all I could move over to it.
     
    Mel_C, 25th Mar, 2017
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  4. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    125 000 secured only to the OLD PPOR
    392 000 secured only to the new IP

    at least one of the loans as IO with offset because you say u will move out again and revert to IP status

    ta
    rolf
     
    Rolf Latham, 25th Mar, 2017
    #4
  5. Mel_C

    Mel_C Well-Known Member

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    Thanks for that again - Makes sense -

    Would you do the same if we were going to only hold it for a year and then sell it and move back?

    thanks
    Tim
     
    Mel_C, 25th Mar, 2017
    #5
  6. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Yes
     
    Terry_w, 25th Mar, 2017
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  7. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    yesterday I would have said yes

    today i would say no,............. if you are guaranteed to sell in 1 year, find the cheapest low rate PI loan u can get for 1 year, from a lender you are happy with.

    Sell the property ex CGT, get your Principal back.

    Question is, how confident that you will complete on that plan ?

    If you are unsure, then the cost of a decent IO loan structure might be regarded as insurance

    Please seek specific advice

    ta
    rolf
     
    Rolf Latham, 25th Mar, 2017
    #7
  8. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Rolf makes a good point. IO loans cost more these days so if you are going to sell paying down the loan about now will save you money and won't have income tax consequences for years to come
     
    Terry_w, 25th Mar, 2017
    #8
  9. Ethan Timor

    Ethan Timor Well-Known Member

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    With most, but not with all, lenders.

    Specific advise would be prudent, yes :cool:
     
    Ethan Timor, 30th Mar, 2017
    #9
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