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  • Profile photo of fostonfoston
    Member
    @foston
    Join Date: 2003
    Post Count: 111

    Hi All, this is my first post. I am currently reading Steve’s book and i like what i have read so far.I am a complete novice when it comes to property investing. My Wife and I have recently purchased a 35 year old house in Logan Central QLD for a bargain price of $115000, needs renovating, nothing serious though.We are currently living in the house.I figure we will need to spend about $10000 – $15000 to bring it up to scratch. i have been following the local market and believe it would be worth in the vicinity of $180000 upwards when we have finished the renovations.We can’t decide if we should sell and use the profit to put towards buying another house to renovate or keep it, rent it out and buy another house to live in.What are your thoughts on this? any advice would be appreciated.

    Regards
    Tony

    Profile photo of xyzzyxyzzy
    Participant
    @xyzzy
    Join Date: 2003
    Post Count: 178

    A couple of quick points

    (1) You have to live somewhere sort of!

    (2) The principal residence is capital gains tax free. You need to have a good understanding of the capital gain rules or the capital gain that you make could be gobbled up very quickly if you are not careful.

    Profile photo of melbearmelbear
    Member
    @melbear
    Join Date: 2003
    Post Count: 2,429

    Tony, if you are at all thinking of renting out the house, and buying another to live in, I would suggest that instead of paying as much as you can off the loan, make minimum repayments, and have an offset account for all the extra you would put in.

    This way, if you do decide to rent it and buy another one, you use the money in the offset account to buy your new PPOR, and the loan on the current house becomes an IP.

    Remember, if you pay off the current loan, and then reborrow to buy your new PPOR, it will not be tax deductible, but by doing it the way I outlined, the entire loan (that remains on the house) will become tax deductible.

    Cheers
    Mel

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

    If you sell you lose money in agents fees etc, even if you do not have to pay CGT. You also go thru a lot of hassle trying to sell it, and you miss out on any future capital growth.

    So I am a big fan of keeping and buying more properties. you can always access equity and use that for the deposits on new properties.

    Terryw
    Discover Home Loans
    North Sydney
    [email protected]

    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

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