All Topics / Help Needed! / PPOR to IP Advice Needed

Viewing 8 posts - 1 through 8 (of 8 total)
  • Profile photo of RetalsRetals
    Participant
    @retals
    Join Date: 2014
    Post Count: 5

    Hi all,

    I am after advice on structuring loans for a new PPOR. Before I lay provide the scenario below, I am aware that making a freehold PPOR into an IP generally is generally not a wise move financially. None the less, the scenario is as follows:

    Current PPOR Value: $400K
    Rent Achievable on this property: $370.00 per week
    Current Cash/Savings: $100K

    New Property Purchase Value: $620K

    Is it possible to try and make the current freehold PPOR, cashflow neutral as an IP? This would mean I would re-mortgage a portion of this home on interest only and put this sum into the new property, this reducing the new PPOR payments. However, can the loan interest be used as an expense with the property currently being freehold?

    Any advice on how to structure the above would be greatly appreciated.

    Thanks,

    Scott

    Profile photo of BennyBenny
    Moderator
    @benny
    Join Date: 2002
    Post Count: 1,416

    Hi Retals,
    Terryw, a contributor with a wealth of knowledge, has laid out a scenario that exactly fits your situation (i.e. you have paid off your PPOR, but now want to move out of it and rent it). Go here to find an introduction to his topic :-

    https://www.propertyinvesting.com/topic/4410491-the-big-picture-for-new-readers-especially/page/3/#post-5037656

    Once you have clicked on that link, read the post, then click on its link to go to Terry’s topic – his ideas are worth gold !! Let us know how you found his advice – did it suit your circumstance?

    Benny

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Who is the property owned by Scott ?

    If jointly with a spouse then a couple of things you can do.

    Probably the question most asked over all 15 years i have been involved with the forum so you are not alone.

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

    Profile photo of RetalsRetals
    Participant
    @retals
    Join Date: 2014
    Post Count: 5

    Hi Richard,

    The current PPOR is jointly owned with a spouse.

    Thanks,

    Scott

    • This reply was modified 6 years, 5 months ago by Profile photo of Retals Retals.
    Profile photo of RetalsRetals
    Participant
    @retals
    Join Date: 2014
    Post Count: 5

    Hi Benny,

    Thanks for the link. I will have a read through Terry’s advice tonight and let you know.

    Regards,

    Scott

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Remember security for the loan doesn’t determine deductibility of interest. It is the use that counts.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Ok Scott certainly opens up a opportunity to go some way towards what you are wanting to achieve.

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

    Profile photo of JaxonJaxon
    Participant
    @jaxona
    Join Date: 2014
    Post Count: 284

    aside from the above advice,

    “Is it possible to try and make the current freehold PPOR, cashflow neutral as an IP?

    firstly, if you had more rental return yes possibly. for e.g. 10k on reno and increase rent by $40PW your far closer to that goal.

    really comes down to the exact specific situation and how you want to tackle it, but depending on a stack of variables you could come out far ahead then if you do the stock standard approach.

    Kind regards

    Jaxon Avery

    Jaxon | Jaxon Avery – Financial Adviser
    http://www.jpafinancialservices.com.au
    Email Me | Phone Me

    JPA Financial Services Pty Ltd

Viewing 8 posts - 1 through 8 (of 8 total)

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