Selling down - possible lightbulb moment

OK so I'm angling for retirement within the next 5 years (famous last words).

If you didn't know already, I'm having a very hard time letting go and deciding which ones to let go.
HOWEVER, am wondering if I can possibly halve the number of properties needing to be sold to save on the dreaded CGT via the following method:

Say I have 5 loans with CBA totaling $1m:

• Property A = $200K loan, value $400K
• Property B = $200K loan, value $400K
• Property C = $200K loan, value $400K
• Property D = $200K loan, value $400K
• Property E = $200K loan, value $400K

I need $400K cash so have opted to sell Property A and B. Ignore selling costs, CGT etc.

Is it possible, without a new loan application or serviceability checks to do the following?

Rebalance the loans so that Property A has no debt on it, and the debt shifted to Props B - E as follows:

• Property B = $250K loan, value $400K
• Property C = $250K loan, value $400K
• Property D = $250K loan, value $400K
• Property E = $250K loan, value $400K

That way, I can sell just one property ie Property A and attain the $400K in cash I need.

Is this possible with the mainstream lenders?

 

Wait, maybe not a lightbulb moment, more like a mental block.....if we've lost Property A, then there's no income coming in for it, and the bank will demand a serviceability check given the reduced income right?

Perhaps the restructure can be done a few months before selling???

 

Yes it is possible. You could have retired several years ago if you had sought advice.

If the values work out you could even reuse the loan to buy another property.

 

My tight ways have cost me a lot more than money.

Regarding reusing the loan, you mean a security swap don't you?

 

If those values and LVRs are accurate, though, asset substitutions and cross coll?

 

Why would you need to cross them if way under 80% LVR?

 

You would have to increase each loan. Can that be done without a new loan app?

 

I don't know, that's why I'm asking lol.

 

@Lacrim why don't you seek some expert advice face to face where you can comprehensively investigate all your options? Something as important as this can't be concluded on a forum imho.

 

No need to cross coll

 

No need to increase loans either

 

curious how does this work

 

I would suggest some tax planning is a great investment. One or two issues will stand out. The unrealised CGT tax on each property and its net equity and its impact of planned taxable incomes will each be a key issues. And strategies around what occurs with equity eg super deductions, contributions and tax.

Likely deductible too. I find taxpayers focus on one issue to their detriment eg the deductibility of interest. Deductibility of interest will be impacted by CGT, total income, super and more.

 

He likes that you don't know how it works MTR. OK I'll admit, I'm intrigued.

@Terry_w I was reluctant to sell periodically and consume the capital but maybe there's no other way.

 

If I do it, it'll be AMP, ME and NAB.

Hopefully, they're not one of the bad ones for this sort of thing.

 

Think about it, a simple solution exists. I will write a future loan tip on it.

 

I recently substituted a loan with CBA.
Had to do valuations to ensure there was adequate equity left but overall no real issues with doing it.

Due to valuations and a couple of other things it did take a couple of months but didn’t have to jump through any servicing hurdles.

 

We started enquiring with AMP for a client and they said no probs, but it hasn't progressed because of the client.

 

I don't understand how you can sell property B to get half the 400k & still have a loan on it.... I'm clearing not sharp enough for this one....