Hi,
I am looking at my first IP and here is my situation:
– PPOR worth $410k, owe $365 – $7k in redraw available
– Want to buy 2 x $100000 positive or neutral cash flow propertieshave access to $20000 in savings
What should i do for my first IP? Try to gather the 20% deposit in order for the property to be $20 more a week more positive cashflow? or use some equity? (i would need to look at putting my parents in law as guarantor as we arent quite at 80% LVR to be able to use equity)
Or borrow 95% plus costs and it becomes neutral, if not negative IP?
I am really stuck with this as i dont understand all the tax implications properly. all i know is that i read the interest paid on the Inv loans is tax deductible correct? So if i pay $5000 a year in interest, that is tax deductible off my income???
Any laymans terms support appreciated, i have booked an appointment to see my accountant but just want some answers now! I am an impatient Gemini!
Richard, you gave me some interesting ideas in another forum but am hoping for some other ideas as well now based on the figures above……
If i refinance my current PPOR, my repayments will go down by $100 a week so am thinking of not using any equity .. i just dont know……
Hi
You don't really have much equity at the moment, so best to keep saving and to keep reading.
You wouldn't want to use cash for your investment as this cash could be going onto your home loan to reduce your interest – which isn't deductible.
Also best not to use redraw and it complicates things – the interest on the money redrawn should be deductible, so you should create a separate account for this so that you can separate the interest.
I would suggest you look at depositing the savings in the loan, and then setting up a new split for $27,000 – or maybe wait longer as this is not enough to do much with. But don't do anything until you talk to your broker and tax advisor.
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
Hi Terry,
i have done plenty of reading in the last 2 weeks and felt i was ready to have a crack to be honest.
I feel that $10k is enough to get started and will get some advice from my accountant first
i was hoping for a more positive response but thanks anyway
Sorry Goldie. Not meaning to be negative but realistic.
You will need around 10% deposit for a property, and then costs such as stamp duty etc – best to allow 4 to 5%.
Your existing property as at 90% LVR too, which is very high.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
what about just taking our PPOR out of it and just starting with $10k. there are plenty of regional NSW properties with about 8% ROI after all costs are deducted etc, there are some cashflow positive properties that we can start with using our $10k
To that I would ask:
– do you think these would be good investments>?
– Do you think there will be growth in values?
– allowing for 10% deposit and 4% costs could you even afford one?
– Did you realise that there may be higher deposit requirements for some regional areas?
– Did you factor in extended vacanies and cost of repairs – what happens if the hotwater system needs replacing?Having said this there are some bargins out there.
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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