Hi,
I am a new investor and new user to this site also. I need your advice on
my first investment.I purchased a property in Brisbane in Mar 2006, on Joint a/c with my
wife.. My wife has no income. We have a set up of variable home loan with
off set account. From last August, I set up an additional payment every
fortnight to reduce the principle. At this time I am looking for
investingPurchase value of the house : $275,000
Loan amount : $260,000
Present loan amount :$ 240,000
Present value of the home : $400,000
Estimated equity: $160,000I want to use this house as PPOR and looking for an IP. My income is
$95,000 pa and my wife has no income. I checked with bank for IP, no
worries. At first I am looking to invest about $350,000 for a house as
IP.
Is there any necessary to transfer my wife's share for increasing
investment loan and tax benefit?
What kind of loan set up is required on IP? Looking at the current sceario of interest rates, what is a good time to
go for IP?
What is good area for IP?Thanks in Advance
Cheers
TumuHi Tumu
Firstly welcome to the forum and I hope you enjoy your time with us.
Whatever you do dont listen to your Bank who certainly dont have any interest and from the sounds of it have little experience in structuring the loan for your benefit rather than there's.
Look to take an equity loan against the current PPOR for an amount of 20% of the likely purchase price plus sufficient to cover the acqusition costs. This loan will need to be in Joint names as the current Title is held Jointly.
Then in turn probably with a separate lender take out a standalone loan against the new investment property which i assume will be in your sole name.
On review you might also want to think about making your current loan interest only unless of course you intend to keep as a PPOR forever and a day and would never rent it out even if you did move.
There are some excellent investor style loans out there at the moment so you should be able to achieve an excellent rate of interest as well as no application / valuation or ongoing fees.
Keep the securities separate and once the IP increases in valuer look to debt recyle increasing the loan to 80% of the new valuation figure and paydown the loan secured against your PPOR. Eventually the entire debt will be against the IP and you can either go again or clear the loan secured against the PPOR for good.
Your mortgage broker should be able to assist you with your options.
Richard Taylor | Australia's leading private lender
Hi Tumu
Firstly welcome to the forum and I hope you enjoy your time with us.
Whatever you do dont listen to your Bank who certainly dont have any interest and from the sounds of it have little experience in structuring the loan for your benefit rather than there's.
Look to take an equity loan against the current PPOR for an amount of 20% of the likely purchase price plus sufficient to cover the acqusition costs. This loan will need to be in Joint names as the current Title is held Jointly.
Then in turn probably with a separate lender take out a standalone loan against the new investment property which i assume will be in your sole name.
On review you might also want to think about making your current loan interest only unless of course you intend to keep as a PPOR forever and a day and would never rent it out even if you did move.
There are some excellent investor style loans out there at the moment so you should be able to achieve an excellent rate of interest as well as no application / valuation or ongoing fees.
Keep the securities separate and once the IP increases in valuer look to debt recyle increasing the loan to 80% of the new valuation figure and paydown the loan secured against your PPOR. Eventually the entire debt will be against the IP and you can either go again or clear the loan secured against the PPOR for good.
Your mortgage broker should be able to assist you with your options.
Richard Taylor | Australia's leading private lender
Duplicated Post
Richard Taylor | Australia's leading private lender
Hi Richard,
Just to confirm (as we have done what you have suggested to Tumu) the interest on increased borrowings against the investment property used to pay down your own loan, are not a tax deduction? E.g. your home is then freehold, but the debt shifted (secured against) the investment property is non-tax deductable, although the increased rental payments on the investment property may be covering it. If this has changed it would be good to know.
Thanks,
GThanks guys, this is really good advice. I heard the borrowings on IP for renovation are not tax deductible.
I also have another thougt of purchasing a land , build new home, stay there for 1 year and sell, take another venture. This is a lenghty procedure, I noticed one of my couligue did it and msde almost 80 K in 1 .5 years. Any inputs on this will be great.Thanks
TumuTo correct a couple of posts:
1) Yes interest incurred on borrowings to renovate your IP is certainly Tax Deductible.
2) Interest charged on increasing your loan secured against your IP with the sole purpose being to pay down debt secured against your IP which was originally used to purchase the IP again is certainly Tax deductible.
Richard Taylor | Australia's leading private lender
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