[VardyParticipant@adamvJoin Date: 2016Post Count: 10]

February 25, 2016 - 11:04 am

Thanks TheNewGuy, I don’t really know much about all of that at this stage, but definitely something I’ll educate myself further on.

[VardyParticipant@adamvJoin Date: 2016Post Count: 10]

February 24, 2016 - 4:03 pm

sonipat wrote:

HelloIf you have outgrown your current residence or want to move for other reasons, you have a few choices to make, such as selling or renting out your home. If market conditions are favorable, you could sell the property, cashing in your equity and making a profit. If getting your equity out of the property isn’t a must, you may also consider using the house to generate income as a rental property.Thanks.sonipatpropetry

That’s pretty much my predicament, I’m unsure what will be best. I want to eventually relocate to Melbourne for family reasons, but in the mean time, if I was to rent the property out and rent a property locally for myself, it would cost me more to rent than just staying in the property on my current IO loan repayments. I know it isn’t really ideal to just be paying IO on your PPOR. While I’m still living in the area, whether I am living in the property or not, I’d still be benefiting from the same capital appreciation, but by living in it, I will have better cashflow.

I know it may seem I am answering my own questions, but being a newbie to all of this, I’m just worried if I am missing something.

[VardyParticipant@adamvJoin Date: 2016Post Count: 10]

February 24, 2016 - 3:29 pm

Thanks for that Benny. I’ll definitely be seeking some further advice on this once I know what course of action I’ll be taking.

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February 24, 2016 - 1:39 pm

It was a transfer under a family law settlement. That sounds like it would be easier to deal with, just more CGT though. Sounds like it might just be easier to get rid of it while it is still my PPOR.

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February 24, 2016 - 12:05 pm

Terryw, that has got me thinking. If I was to rent it out and then sell it, would I pay CGT on the original purchase price, or the price used for the seperation settlement?

I’m assuming the original purchase price, as that would make it in line with the interest deductibility you made me aware of, but just thought I’d clarify.

[VardyParticipant@adamvJoin Date: 2016Post Count: 10]

February 23, 2016 - 1:37 pm

Thanks for that Terryw. What kind of professional would I need to seek the services of to get the loan split into the relevant portions – accountant, lawyer?

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February 23, 2016 - 12:55 pm

Terryw wrote:

Vardy wrote:

Due to refinancing to keep the place the LVR is around 90%, but hoping after the fixed interest period it will be closer to 80% or even slightly less

It is only the interest on the loan associated with the purchase of the property that is deductible against this property. So if you have ever increased the loan or used redraw the interest on this portion won’t be deductible against this property’s rent.

So, when I refinanced to buy my ex-partner out would that be considered a loan to purchase the property, or redrawing equity? At the time it, it was valued by th bank $65,000 more than I originally paid for it. Just considering there was a change of title from both of our names to just my name.

• This reply was modified 8 years, 2 months ago by  Vardy.

[VardyParticipant@adamvJoin Date: 2016Post Count: 10]

February 23, 2016 - 12:43 pm

Thanks for the advice Benny. That has been one thing worrying me. At the moment the variable rate is the same as it was when I went fixed, so it will be just over $1000 to break the contract. I guess other than speculation, I won’t really know until settlement if I did choose to sell. Another reason I think it might be best to hang on to the place for now.

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February 23, 2016 - 11:04 am

Thanks for the constructive responses guys, I really appreciate it. My $1065+ cash flow was based on some assumptions, and after getting some quotes and rental valuations done, I’d actually be needing to contribute around $45pw if I was to rent it out. So I actually see it as no benefit moving out and renting it out now, as I’ll only be reducing my savings/debt servicing capacity, as renting myself will cost similar or more to servicing the loan plus other expenses.

-I just used an estimate of about $7000 for the first year for depreciation.
-Due to refinancing to keep the place the LVR is around 90%, but hoping after the fixed interest period it will be closer to 80% or even slightly less.
-It is currently only valued around $500k.
-The loan is currently fixed IO.

I think I’m best staying put and continuing to save and hoping for some good growth before I make any decisions on selling.

Please let me know if I am missing anything obvious here, as I’m only just starting out.