Hi Guys,
I split up with my girlfriend 6 months ago and we were in the process of building a new house together. The house was finished 2 months ago and my ex has been living in the new house. The house is in a new estate and over the next 12 months 2 golf courses will be completed, health club, pool, spa, etc. These facilities are in the process of being constructed. The house will be worth much more in 12 months after these facilities are completed.
Current Loan = $395,000
Current Value = $525,000
Estimated Equity = $104,000We have 2 options :
1) Sell the house now for $525,000 and make about $55,000 cash each.
2) We could rent the property out for $400 per week. We could also draw down $104,000 of equity ($52,000 each) to invest in other areas. Our new loan would be $499,000 but our interest payments would now be tax deductible and we could claim other costs associated with keeping the property such as rates, insurance, etc.
After 12 months when the facilities are completed we could sell the house for approximately $600,000, pay out the loan and pocket an extra $40,000 each. Total profit would be $52,000 (equity) + $40,000 (profit on sale) = $92,000.
If we take Option 2 would we have to pay capital gains tax on sale ? (We would both be renting for the 12 months and would not be claiming another ppor during this time).
What would you do in my situation ? Option 1 or Option 2 ? Can you give me some positives and negatives for both options ?
Any advice would be greatly appreciated !
Cheers [biggrin]
Brad
Hi Brad
Sorry to hear things didn’t work out…
1) quick, tax free, move on with your life,
2) you may (?)make more money, CGT issues and a multitude of other potential issues that can cost you time money and angst….
What would I do? Sell.
Good luck
Tonysee a solicitor asap and organise the division of assests before other parties get involved. Do it now while things may be more amicable.
I would take the small tax free gain and move on.
Good luck
Don Nicolussi | Mortgage Broker - Home Loan Warehouse
http://homeloanwarehouse.com.au
Email Me | Phone Me"I think of finance as a technology, a way of getting things done." Robert Shiller
Yep, I agree with the others- get out now whilst there’s some certainties- about amicability, and market viability.
Breakups are a vulnerable time- any certainty at all is a bonus. Foretelling future values of the property is a risky business. It may be worth 600k in 12 months time… or it may be worth 500k- noone can tell.
I’d take the money and go and buy a new girlfriend [biggrin]
kay henry
sorry,
Take the cash and “RUN”
I did this and I’m 2m better off today.
RegardsGreat feedback guys, much appreciated !
I agree with all of your comments, you know what they say, a bird in the hand …… !
I think I will just cut my losses, make a fresh start and put it down to experience ! The $55k will still give me a descent deposit to buy another IP and I will probably save myself a lot of headaches over the next 12 months !
Cheers !
Any other thoughts ?
Brad
Or option 3) You buy her out (or she buys you out). There may be stamp duty concessions here.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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