I am battling myself on what to do here... I have an IP (terrace in annandale) in sydney that i feel has done the bulk of its growth for this cycle. i think it will stagnant for several years from here. this property also effectively costs me $5,000 odd in land tax each year....if i sell i would be up for roughly $100k cgt, plus agent fees....it is slightly negatively geared, and almost covers mortgage repayments. now do i sell and use funds to buy interstate? or refinance, and hold for the long term? help!
Im sure you know that land annandale is absolute gold and personally I would hold on to it. Why not leverage and go again?
Unless you've bought a lemon and need to cut it from your flock, its going to cost you more to sell it than to keep it. Why not borrow against it to increase your asset base into further CG exposure elsewhere?
Must be worth around $1.5mil. So if you sell this and buy another $1.5mil of property there would be around $100k in stamp duty to pay again plus the CGT and agent commission (That would be about $30k). Annandale is an excellent area so long term it should be a good capital growth suburb.
Also factor in the new finance issues - you may find it harder to qualify for finance now than in the past.
How long have you had it for? I'm also in the keep it camp. What did you buy it for and what is the current rent?
Dave - I think the consensus is to defer selling and retain the quality and gear up to buy in a location that doesn't add to the LT (ie QLD etc). Annual $5K LT is a hefty cost but just 5% of the possible CGT and if the property merely experiences 0.45pa% growth it covers the land tax. If you can finance the (tax deductible) land tax its seems a better position to hold it. A low growth rate of 0.45% isn't what an investor will target. Lets say its 5%...$55K a year growth. I'm always wary of taking a hit on CGT as it can reduce the equity to reinvest by 25% or more.
