Hold IP or sell for new PPOR + IP?

Hello property Gurus!

First time here, please be gentle!

Just come from accountants who advised to sell IP in Brisbane (worth approx 400k, 121k owing) to buy a PPOR (on the basis that rent money is dead money). IP was PPOR bought in 2004 no other props bought in between. IP is furnished and cash positive and self managed with great tenants on lease @ $300pwk. We claim tax deductions on furnishings and renovations. We currently rent in Canberra (310k) and have reduced joint employment income of approx 80K combined whilst we look after 2 toddlers.

Previously after some research we were planning to use equity in existing house to buy another IP to rent furnished room by room to increase returns/maximise deductions whilst renting for a few more years.

Does the accountant seem to have it right? Or not?

She also did not like the idea of personal trusts or setting using a business to buy IPs with.

Thanks for your insight, all most welcomed.

Hi Laurie

Firstly welcome to the forum and I hope you enjoy your stay with us.

Doesnt sound to me like your Accountant is particularly switched on when it comes to property investment and wealth creation.

I am not aware of the location of the property in Brisbane but the value certainly isn't falling and i fail to see why you would sell it to buy a PPOR and then gear off the PPOR to buy more IP's.

If you wish to buy your own home and retain the IP then why would you not sell the IP to a Trust structure, borrow the full 100% of the market value and use the net realised amount to use as deposit for the PPOR.

This enables you to reduce the non deductible debt and increase your deductible debt.

Whilst stamp duty would be payable on the Transfer here in Qld it is certainly worth consideration.

If you are happy rent in the ACT then why not merely use the equity in the IP to boy more IP's and carry on renting.

Only consider would be the structure of the loan as from what i can work out your current loan appears to be an principal & interest loan which is probably not a prudent course of action.

If your  mortgage broker is experienced with investment property structures then he should be able to suggest a few ways to set up your new purchase. Drop us an email if you have any further questions.

Cheers

Yours in Finance
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
www.tayloredfinancialsolutions.com.au
richard@tayloredfinancialsolutions.com.au.
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