Yep, landlord insurance is essential.

It is also tax deductible as an expense, so it won't cost as much in the end.

This is one of the major reasons why I'm not a fan of long term fixed rates. Peoples circumstances always change and it creates huge headaches down the track when loans need to be accessed/changed for one reason or another.

In your circumstance, like others have said, option 3 is the best even if it is above market rates.

Unless they are referring to guarantee loans which are technically 100% loans?

There is no way that they will eliminate interest only loans, unless they want housing prices to drop dramatically.

Agree with xdrew. The above property is close by Eastlink which is a positive, but something close to a train station and shopping strip/centre should add "more" to future return and growth.

In regards to onselling the property before settlement, recently my sister bought property from someone who was onselling to her before settlement. The original buyer was trying to sell at a small profit but was told that if that was case, then both he and my sister would pay stamp duty, however if it was onsold at the same price as what it was…[Read more]

Thanks Terry, basically as I thought. You can't clam that you are paying off the non-deductible portion of the loan first, has to be done in proportion.

Yep, keep all your IP loans separate and interest only even if they are with the same lender, do not combine them.

If your intentions with the new PPOR are to live in it permanently then P&I with an offset account can be considered. If there is an inkling that you are looking at moving on from the new PPOR, even if its a long way into the future,…[Read more]

Terry, with your comment above, are you saying that because some of the loan is lets say tainted for want of a better word, then the complete loan would be non-deductible?

I thought that even though it was a mixed purpose loan with no sub accounts, it was as simple as working out the percentage of investment to non-investment and working with that?

As others have mentioned here, worthwhile changing your PPOR loan to interest only. Even though you already have an offset account saving you interest, changing to IO and putting that extra "principal" into the offset account has the effect of you still paying the same amount of interest as if it was P & I. The bonus will be when you decide to…[Read more]

Hi gabsman,

An accountant can probably confirm, but this is my take on it.

The purpose of the loan determines it tax deductibilty. With this extra $3,000, $700 of it is allocated for admin and legal cost costs, which since it is an IP can be proven it is for investment purposes, so the interest on this portion is tax deductible.

However the…[Read more]

DWolfe,

Yarraville is what my wife likes to call new money, with a young(er) demographic buying in or renting there. The whole area around there like the ones you mentioned Kingsville, Seddon and also Newport appeal to people who can't afford neighbouring Williamstown but want to be close to it.

Also agree with Sunshine, taken off in the last…[Read more]

Hi Mrs Bee,

Whereabouts on the Mornington Peninsula are you located? Nice down that way, especially in summer.

Like others have said, the maths would need to work for yourselves, with CGT coming into play if your PPOR becomes an IP. On the flipside, the outstanding loan will then become deductible debt for tax purposes (claimable interest).

You…[Read more]

In reality a property is worth what someone will pay for it. If the asking price is overpriced, the market will let them know soon enough.

As Freckle said, don't let emotion get you into a bad deal.

You mentioned something about paying off a bad debt. What exactly did that entail? Did it coincide with any defaults against your credit history?

If so, it might restrict what lenders and LVR you are be able to get.

South Eastern suburbs in Melbourne are always a good bet however median prices might be out of reach for some.

If that's the case, the north and western suburbs offer some good value with potential for growth. Places like Yarraville, Pascoe Vale, Glenroy, Epping, Airport West, even Sunshine are still affordable, and border/close by some…[Read more]

As per what Jamie said.

Make sure that both loans are separate.

Current loan to be split into 2, one split for current loan, other for the deposit of the new property, and second loan on the new property itself.

SilicoN,

There is what is referred to as the 6 year rule for CGT, where if you purchased an owner occupied property, live in it and decide to rent it out, you are allowed to rent it out for up to 6 years and it will be CGT exempt. This however only applies if during the period the property is rented out, you don't have another property you claim…[Read more]

Just to play devils advocate here, are you sure about that Shahin? Wouldn't the lender have a different view of this?

I thought that lenders had a policy where they could cancel a loan if they found out that false information was given in connection with the loan, especially if it had to do with granting approval, which it seems would be the case…[Read more]

Hi Daniel,

First off anytime you incur capital gains, it is added and forms part of your taxable income for the year, and is then taxed at the appropriate rate.

However, in your case if it is indeed your main residence (and no part of it was rented out, etc) then there is no capital gains, and therefore no tax to be paid on the profit (and will…[Read more]

Cheers for clearing that up up Richard.

Same as if you have a long term IP loan and refinance within the first few years, you can claim any remaining non-deducted LMI premium in one hit on the following tax return.