All Topics / Help Needed! / Transferring equity from one IP to another ?

Viewing 13 posts - 1 through 13 (of 13 total)
  • Profile photo of DEVILZDEVILZ
    Participant
    @devilz
    Join Date: 2012
    Post Count: 33

    Hi,

    Silly question as usual:

    is it possible to take equity from IP # 1 and transfer it to IP # 2 ?

    Main idea behind it to make IP # 2 CF+ when IP # 1 remains CF+ as well even with increased loan.

    Thank you in advance

    Profile photo of Jacqui MiddletonJacqui Middleton
    Participant
    @jacm
    Join Date: 2009
    Post Count: 2,539

    Why do you want to do this? 

    Do you already own the two IPs or do you only own IP #1 and you are hoping to buy IP #2 ?

    If you already own the two IPs, are they both held in the same name?

    Jacqui Middleton | Middleton Buyers Advocates
    http://www.middletonbuyersadvocates.com.au
    Email Me | Phone Me

    VIC Buyers' Agents for investors, home buyers & SMSFs.

    Profile photo of DEVILZDEVILZ
    Participant
    @devilz
    Join Date: 2012
    Post Count: 33

    I have 2 IP. One is CF+ with a lot of  equity  ~ 150 K ( ex PPOR) and another one is Negatively geared with 0 equity.

    I want to have two CF+ IP.  yes they are both under my name.

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Hi Devilz

    Yes you can certainly transfer the equity from one property but i can't really see any real reason for doing so.

    It won't benefit you Tax wise as the interest will still be deductible.

    Only benefit would be if the properties are cross collateralised and you want the securities to standalone.

    This certainly would have some value.

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Hi Devilz

    Yes you can certainly transfer the equity from one property but i can't really see any real reason for doing so.

    It won't benefit you Tax wise as the interest will still be deductible.

    Only benefit would be if the properties are cross collateralised and you want the securities to standalone.

    This certainly would have some value.

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

    Profile photo of Jacqui MiddletonJacqui Middleton
    Participant
    @jacm
    Join Date: 2009
    Post Count: 2,539

    Indeed. If one is making a loss and the other a gain, it is irrelevant. You subtract your total losses from your total gains and that overall position goes on your tax return as one aggregated figure

    Jacqui Middleton | Middleton Buyers Advocates
    http://www.middletonbuyersadvocates.com.au
    Email Me | Phone Me

    VIC Buyers' Agents for investors, home buyers & SMSFs.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Yes, no change to taxation for 2 reasons

    1. Purpose of the loan determines deductibility, not securty, and

    2. Same owner so a negative on one offsets a loss on the other.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of DerekDerek
    Member
    @derek
    Join Date: 2004
    Post Count: 3,544

    Seems to me you are over analysing things – your proposal makes no difference to your overall situation.

    Total debt, total asset value and total income all remain the same.

    A 'nothing' move in my opinion.

    Profile photo of DEVILZDEVILZ
    Participant
    @devilz
    Join Date: 2012
    Post Count: 33

    thanks.

    all comments make sense

    but what if in the future I decide to sell one IP which has a lot of equity? in this case if I increase LVR to max and transfer equity to another IP I will save on CGT. Is it right ?

    and another point why I want to do this: That IP is in mining town so it can drop value at some stage (maybe not) so I rather get equity from it now while it is on the top than later.

    Make sense or I am silly?

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    DEVILZ wrote:
    thanks.

    all comments make sense

    but what if in the future I decide to sell one IP which has a lot of equity? in this case if I increase LVR to max and transfer equity to another IP I will save on CGT. Is it right ?

    and another point why I want to do this: That IP is in mining town so it can drop value at some stage (maybe not) so I rather get equity from it now while it is on the top than later.

    Make sense or I am silly?

    Loan amounts have no effect on capital gains tax.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of DEVILZDEVILZ
    Participant
    @devilz
    Join Date: 2012
    Post Count: 33

    ok I am silly. Thanks Terry

    …went to GOOGLE to get more info about CGT….

    Profile photo of JpcashflowJpcashflow
    Participant
    @jpcashflow
    Join Date: 2007
    Post Count: 575

    Hi devil 

    How much capital gains tax you will pay ,will depend On what price you bought the home for what price you sold the home and how many years you have had the ip 

    Like the guys said its one account just offsetting another 

    if the property drops and you use the equity  that means your overall net position is still less 

    Jpcashflow | JP Financial Group
    http://www.jpfinancialgroup.com.au
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    Your first port of call in finance :)

    Profile photo of DEVILZDEVILZ
    Participant
    @devilz
    Join Date: 2012
    Post Count: 33

    ok thanks.

    so I leave everything as it is and just need to do Valuation for this Unit (ex PPOR)  that became IP recently?

Viewing 13 posts - 1 through 13 (of 13 total)

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