Good Morning! 1. Fully paid Investment property tenanted ( used to be PPOR), lived in 2004 to 2013, we thoght of selling, but the market is kept rising, so we have decided to held. 2. Bought a PPOR in 2013 3. Planning to buy a next Investment, how do I structure the loan? 4. Should I sell my fully paid Investment and move those funds into home loan? 5.If we decided, rent out our current PPOR, move into another - is also a possibility in the future, if we choose to exercise this option which is the best way to structure? Both properties are in my and spouse name. Thank you!
Tax should only be one consideration, not the main driver, when making decisions. If the fully paid off IP is in a good area with better than average growth prospects, it may be more economical in the long run to simply pay any tax and keep it. Marg
My thoughts... I'd take funds from the fully paid off IP and put that towards the new IP. Then you'd have a lot of tax deductible debt (good). You could move from your PPOR but instead of moving to another PPOR move into a rental. Doing this means your current PPOR earns rental income but you can still claim 6 years away from the home and still be CGT free. There are other things you can do, but for me, these are the two simplest and easiest things to do. I probably wouldn't sell the current IP. The things that would make me think about selling it are: * You feel it won't go up in value in the next few years, the market is near peak. * If it's stopping you from making your next move, then by all means, sell. Note there will be CGT implications if you sell, so i'd hold in general.
Apart from going variable IO, what else did you want to know about structuring the new IP loan? Based on what you wrote I imagine you aren't planning for a huge portfolio so i'd go for 80% loan, with the rest of funds coming from IP1.
I think you need a face to face discussion with somebody who can take into account all of your objectives. The area here is complex and you are talking about large amounts of money.
