Would you sell or keep

The Hillsdale property could possibly be CGT exempt if sold within 6 months or within 6 years (different legislation).

But selling one property to buy another would mean a loss of about 8% in transaction costs, even without any tax.

I'd be inclined to hang on for a while yet.

 

A bit more background about us.

We are both in our late 30s with two kids 6 and 2 years old. We are totally new to this property investment idea but our long-term goal is to achieve a sustainable passive income through investment to retire in 15 years. Considering we have just made our PPOR purchase, we do think we will need to aim for some decent CG in the next few years in order to generate some equity to leverage borrowing.

Financially, we have a combined income of around $270k with an approximate debt of $1.25m from the new purchase (this is on top of the $184k).

We will probably need to seek some formal advice from a property accountant/financial adviser. Can anyone recommend one in the Sydney eastern suburbs.

Many thanks,

 

I'd actually be considering the reverse position to Pete's idea....Ie Mr (high earner) borrows to purchase the 50% half-share presently owned by Mrs. so he then owns 100% of the IP going forward.

If it costs $300k plus transaction costs to acquire said half-share this might suit your profile if you want some tax-help on the gearing aspect. Then Mrs pays her cgt-exempt $300k off the non-deductible new PPOR debt which is nice. Its a good tax angle but has to sit with your asset protection comfort level as well. Worth a thought though.

 

The trouble with transferring 50% now is that if it is no longer the main residence the 6 year rule could only apply to 50% of the property going forward.

 

Depends on how the figures fall overall. Existing loan, current value, potential rental income, potential depreciation all play their part. Hence properly qualified advice is definitely needed.

 

I did some calculations last night along this guide. It would seem we would be better off by only $6,500 in interests a year if we sell. However, I am sure there will be other intangible aspects which we will need to consider. Will go to seek qualified advice.

Can anyone please recommend a property accountant in Sydney?

Thanks

 

Try @Paul@PFI

 

Sorry for not following the thread last week. I was travelling for work in rural queensland where there was very limited internet.

Thanks Terry. We will give Paul a call in the week.

However, the wife went to see another accountant through a friend last weekend, who claimed to specialise in properties. She seemed to think that we could refinance the existing loan and use the interests of the refinanced loan balance towards tax deductions.

On an off-topic question, we received our mortgage document last week, which states a different interest rate to the one that we have been offered. When we asked the would-be loan manager, we were advised whilst the rate cannot be changed on the document, further rate discount will be applied through their cost centre. We are just wondering if this is something pretty common and should we ask for a written confirmation from them?

Thanks

 

That accountant is just plain wrong - or you have misunderstood or misreported. Ask her what is the legal basis for her advice, what section of what act and any ATO rulings to back up her position. Refinancing doesn't change use which determines deductibility.

Yes that is pretty common. Sometimes the manager is not able to follow through on their promise. So get it in writing. You probably would want the discount amount rather than the rate.