Hi Everyone,
I have just complete the latest copy of Steve's book, thus being the only copy I have read. I bought a property 12 months ago, borrowing a 100% of the purchase price. I financed the property with an interest only loan of 75%of the property and a separate 25% principle and interest loan against another property. My property returns 6%, but my problem after reading Steve's book is the property is not positively geared. The property would be positively geared if I pay out the 25%. What shall I do?
I'm currently building a property to live in which will take all my current saving's. Should I pay the 25% out on investment property with the current saving's and extend the difference on my home mortgage? What are my options?
Why on earth would you want to pay out an investment loan when you will have a non-deductible mortgage on your home?
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
My aim is to purchase another property in the future. I simply cannot afford to have a number of negative geared properties. If I have a positive performing property it would be a closer step to obtaining another. What are your thoughts?
But you are only decreasing the investment loan by taking away cash which you could have used on your home loan. This means your overall loan size is the same, but you are decreasing your deductible portion. ie you are throwing money away by increasing your taxes.
Doesn't make sense.
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
I see what you are saying, what would you do?
Pay down all non deductible debt as fast as possible (or better – keep the money in a 100% offset account attached to the PPOR loan). And borrow as much as you can for paying investment expenses.
When the non-deductible loan is paid off then you have a choice of paying down existing investment loans or getting more investment properties – or may be a bit of both depending on your risk profile.
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
Ok, this make's sense, thanks Terry.
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