Re-finance or Re-structure?

[Tim BassMember@tim-bassJoin Date: 2008Post Count: 6]

February 22, 2008 - 3:46 am

I currently have two properties and am looking for advice on how to structure my loans.

The first is an IP formally POPR that is valued at 200K, rents for $260Pw and has 130K equity.
The second i bought as a POPR and decided to rent out recently for $265Pw that i payed 330K for 5 months ago.

The IP is a VLOC loan for 71K, and the POPR is split 150k P&I fixed / 180K P&I variable.

As i intended to sell the first to put into the second i set it up this way, but now after reading a few books on the matter i've decided to keep the first, especially because of it's CF+ nature.

Can any one recommend a better loan structure for this scenario?

Also is it to late to pay the extra 7K stamp duty on my second house and claim it as an IP rather than the POPR i first got the loan for only requiring 3K stamp duty? If so how do i go about it?

Thanks,Tim Bass.

[Richard TaylorParticipant@qlds007Join Date: 2003Post Count: 12,024]

February 23, 2008 - 5:24 am

Hi Tim

You are limited to what you can do as part of the loan is fixed however i believe if you were prepared to break the fixed rate or it is close to expiry then you could structure things a lot better.

If the property is being rented out then you are able to claim the interest as a deduction and all of the other expenses such as rates etc. The fact that you have not paid additional Stamp Duty is not an issue with the ATO merely the relevant State Duties office.

Richard Taylor | Australia's leading private lender

[Tim BassMember@tim-bassJoin Date: 2008Post Count: 6]

February 24, 2008 - 11:51 pm

Ok, thanks! I'll contact the duties office and find out if i need to pay more stamp duty. I did live in it for a few months, maybe just start claiming tax deductions when 6 months is up? (in 2 months time).

Is there much advantage in having interest only loans other than for a smaller weekly repayment? And what about CF+ properties can you claim that interest on tax, or do you have to pay tax on your profit?

Thanks Tim Bass.

[Richard TaylorParticipant@qlds007Join Date: 2003Post Count: 12,024]

February 25, 2008 - 2:25 am

Hi Tim

Yes i am an advocate of interest only loans for a multitude of reasons.

With regards to +cash flow properties your rental income will be added to your other income for the year but remember the interest and other cash and non cash expenses can be deducted from this figure.

Richard Taylor | Australia's leading private lender

[Tim BassMember@tim-bassJoin Date: 2008Post Count: 6]

February 25, 2008 - 10:14 am

Thanks for the info Rick! You've been very helpful.

-Tim Bass-