I would like your opinions on only having IP’s and not a PPR. I am about to sell my PPR for about $1.1m and I am tempted to spend it all on IP’s only rather than having a PPR. Should I be ultra safe and 50/50 the money.
Anne
Hi Anne. Welcome to the forum. Congratulations on your position – I’m not jealous either…..[headphone] A bit of general ‘sounding board’ type reply is-
1) Don’t rush into spending it all – your priorities and goals can and do change with time. Have you set goals? Not as silly as it sounds, you don’t have to show or tell anyone else.
2) Investment properties are obviously great, but in all fairness, why would you want to pay someone rent when you could own a modest PPOR instead of a 1.1 mill one outright, and depending on where you are looking at investing, also own several IP’s outright, and then lever off them later to get more?
Food for thought. In your position it does not sound like it has to be one or the other. All the best with your journey. [strum]Good on you Anne.
I would certainly advise you to read Steve McKnight’s latest book (0-260 properties in 7 years) and probably his 2nd as well (1mio in properties in one year)
In both he describes people who were exactly in your position and decided to sell. I know it is not very anti this forum where everybody encourages to use the equity in your PPoR. While this is certainly possible and what I have done (we are too attached to this place), I believe that financially you are in a better position to rent and use all your equity.
You are paying somebody rent who makes perhaps 5% yield, while you try to find much higher yielding properties. You will be in a much better position to access funds as you have more equity it is easier to service the mortgages.
Talk to a good accountant and a good mortgage broker. Especially the mortgage broker can run a couple of scenarios through his computer.
Good Luck
Anne
I agree with Bridge i can see no problem in realising your cash and then assessing the market and renting for a while.
As a financial planner and investor I would not advocate investing all of your cash funds into IP’s but look at a spreading your risk into a variety of investments vehicles.
If you read my past posts you will realise that i am very property orientated and have a substantial portolio of cashflow properties but also believe that cash can always be your friend especially when you are looking for opportunities.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
Thanks you all for your comments and suggestions I will certainly consider all the advice you have given.
AnneYour PPOR is the only tax free asset you can have. Not having one can mean you pay more tax in the end. I am all for having a PPOR, but not living in it – are you aware of the 6 year rule where you can rent out your PPOR and not have to pay CGT while being able to claim all expenses while it is rented?
Terryw
Discover Home Loans
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Terry,can you give us a source for the 6 year rule. I have never heard of it before and cannot find it on the ATO website on CGT.
Terry,can you give us a source for the 6 year rule. I have never heard of it before and cannot find it on the ATO website on CGT.
Hi Bridge,
it is under s118.145 of the Income Tax Assessment Act 1997:
http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s118.145.html
Terryw
Discover Home Loans
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Send an email to get my newsletter.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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