To sell or not to sell

Hi PCers, I have been following PC for a little while. For weeks hubby and I have been agonising over whether to sell our PPOR and I need your help to get us out of this misery.

Our PPOR is a 2br unit in Sydney. we bought it 6 years ago under hubby's name. In the 6 years we are here, we got married and had two kids. It's crowded but it is full of memories. In time our young family would like to move into our (only) IP with a bit more space. Ideally I'd like to keep this current place. The problem is almost all the debt is under the IP. The PPOR has only 300k owing. Local agents reckon if we sell the PPOR, we'd get 1.4 and it's tax free. If we are to rent it out, we get a 2.5% return and miss out on quite a bit of negative gearing benefit.

Rationally, I accept selling may not be a bad idea. it's tax free and we can buy another IP with full negative gearing but, I am emotional just thinking about selling this place. Is there a way to keep it without losing the negative gearing benefit? I've been thinking about it and one of the post by a well known lawyer on this forum gave me this idea - hit me straight if it's crazy - since it's just under hubby's name, can hubby transfer/sell it to me (stamp duty free because it is PPOR), then I borrow 100% on this (using the equity in IP as collateral so no LMI). In time we move out and make it an IP. This way we can keep the unit without paying stamp duty again, avoid the hassle and cost of selling and buying again and still have the negative gearing benefit. Does such thing exist or am I way out of line?

Apologise for the long post. Please tell me if my crazy idea is just not gonna work. Or I should just get over it and sell it (the kids are too young to remember much anyway). Or just keep it and forgo the negative gearing? Or you think the market is going to dig anyway so just sell it? Or I'm just all over the place and you can recommend me a trusted accountant.

Phew it feels good to typing it all out. Many thanks in advance.

 

2 years post-sale you'll barely remember the place.

We left the UK 10 years ago and rented out our UK PPOR that'd we had for 7 years, it was out first home and we sweated blood renovating in on a shoe string over the years.

I wanted to sell it as I really didn't like the thought of it still being "our home" whilst someone else lived there.

Didn't take long once we were out of there not to give a stuff any more. The house is just the material aspect of the memories, you'll always have the memories regardless of what happens to the house.

 

Could he sell the IP to you? You would borrow to fund the purchase. Sale of PPOR is CGT free however stamp duty may apply.

If you borrowed and as a result the property was negatively geared, do you have an income against which this loss could now be offset?

 

Many thanks for the reply.

Re stamp duty, this is what I read on the osr website. It looks like duty free to me since it's our ppor. What do you reckon?
Exemptions and concessions | Office of State Revenue

 

Maybe but I don't think this would change the use of funds? I.e. still in same boat

 

Thanks for the quick reply @Beachman. So regardless of stamp duty, I still can't get tax deduction on the interest payments?

 

No expert but suggest not. Maybe part IV A in any case? Cases like this another reason why offsets are so handy these days

 

It's amazing how good it feels to do things the right way. I understand the emotions involved but at the end of the day it's bricks and mortar. Let go, be free.