- chetnik73Participant@chetnik73Join Date: 2007Post Count: 47
I was wondering if anybody has used the strategy of buying a PPOR and only paying interest only, then converting it to an IP ? We are looking at Sydney as an option but the prices (with principal and interest) are high.
Thought maybe somebody has done something similar. If anybody can help particularly with the rules ie how long do we need to reside in it and CGT impacts that would be great.freelanceMember@freelanceJoin Date: 2008Post Count: 93
To get the FHOG you need to live in the PPOR for 6 months within the first 12 months of settlement. After that, it can be converted to an IP.
You will also receive a 50% Capital Gains Tax discount if you own the property for 12 months.chetnik73Participant@chetnik73Join Date: 2007Post Count: 47
Thanks freelance2020. Any ideas on this as a strategy though?
We are a young couple with one IP currently. We would love to buy another IP whilst rates are low and lock in a fixed term for three years just to see what would happen, then decide in three years if we hold or sell. Out of pocket expense would be minimal. Only problem is that we also want our own home and in Sydney. If we lock all our money into a deposit I fear we would put ourselves out of the chance to own another IP for ages. We beleive the current period is prob our best chance for an IP.
Just trying to think outside of the square and achieve both. We arent concerned which order we do it in.
Any tips from the pro's out there would be greatly appreciatedTerrywParticipant@terrywJoin Date: 2001Post Count: 16,213
A number of my clients have done that – buy, get the grant, live for 6 months and then move out and rent it. Worked well – but now with low interest rates it may work out cheaper to stay in the place rather than rent it.Richard TaylorParticipant@qlds007Join Date: 2003Post Count: 12,024
Nothing to stop you taking out a 95% IP loan sitting the balance of your savings in a 100% offset account and then using the savings plus your First Home Owners Grant as deposit when you find your own property down the track.
Richard Taylor | Australia's leading private lender