Should I try to sell after settlement?

Hi all

I made a bad financial decision and bought an apartment in North Ryde for 825K, wanted to get out of settlement but can't. Now I can either try to sell it after settlement which means I will make a loss immediately because of stamp duty and agents fees and myriad of other fees associated with it. Or I can leave it for a year and try to neg gear it. Currently it's on a IO loan.

I'm also worried about the future of it seeing so many building defects happening recently, so not sure if I leave it for another year will I be making more loss or not.

I initially wanted to live in 1 room and rent out the other.

Would love to hear everyone's thoughts. Thanks!

 

When will it settle?
What would it sell for?

 

Why dont you want to live in it anymore? What has changed about the original plan?

 

It'll settle next week. If I sell for the same price then obvious loss

 

I have another place that I share with family members, and initially wanted to get this place to be closer to work, but that was a stupid move, because I work from home 3 days a week. Even if I airbnb it it'll still be peanuts comparing to a huge debt I'm having right now

 

Why can't you live in it ?

 

I can, and will, until I can sell it. The point is i'm regretting this purchase, and that money should've been used more wisely in other investing strategies, just trying to get some advice of how soon I should be selling it.

 

Would you rent if you sell or buy a different unit ?

 

I would probably airbnb for 2 nights/week, which should cost around $100/wk. Sadly after this experience I think properties are not for me.

 

You still will need somewhere to live and properties will probably still be a good investment.

 

Hard to answer. I would first stay away from apartments. But if I have bought one (and in Ryde for that matter). I would have first checked who is the developer and the builder.

If they are good names and large companies, I wouldn’t be worried to much. They have reputation to protect. Companies like Meriton, would usually fix defects. And I would offload the unit before the warranty expires.

Also people have short memory. Soon Opal, Mascot and similar might be forgotten.

If that is not the case. I will seriously consider getting out depending how much the loss is.

 

If I sold at a loss could I claim capital loss and offset against income?

 

No.

 

But if this was $100% investment then I can?

 

Capital losses can only be claimed against capital gains, not, say, salary.

 

Yes that’s what I meant, future capital gains say from my shares later.

So going back to the previous question, if 1/2 the apt was used for investment and I made a loss after selling, could I claim 50% of the loss against future capital gains?

 

Get a solicitor to go over the contract.

Are you sure you can't back out of the contract?
Would stamp duty be refundable if you didn't proceed with settlement?
What is the market value right now?
Would it make sense to forfeit the deposit?

 

10% deposit is 82.5k, plus all the fees etc, say $85k. I think market value would be the same if not lower now after mascot incident. Settlement is next Tuesday so I think might be too late now

 

If you sell it in a hurry, there will be a loss. If it is well built in well located area, it would stood the time (since you have already bought it)

 

Yeah I’m praying for the best and will try to keep it for at least a year and see how things turn out