Selling an IP

[rumba76]

Hi there,

I just have some questions relating to selling an IP.

My husband and I currently have a large debt on our PPOR which we are paying off as much as we can, to be able to extend our house in about 6 years time. We also have 1 investment property with the aim to buy more when we pay more of our PPOR debt off. The planned extension on our PPOR will obviously add a substantial amount onto our PPOR debt.

So I have been thinking of ways to fund this extension. I have been toying with the idea of buying an IP and selling it within 6-10 years to help fund it.
I have done the numbers and should be able to make enough profit to cover the extension after capital gains etc.

I then had a look on the forum regarding selling an IP and had noticed comments such as "selling to a family trust, allowing you to keep the IP, refinance at above market value and put the proceeds into PPOR loan."
I was then wondering if you are allowed to buy an IP in one spouse's name, sell it to the other spouse and then put the profit back into your PPOR loan? Again I did the numbers taking into account stamp duty as well and was still happy with the possible profit. This option looked good, as I would like to hold onto the IP if possible.

So is this allowed? What would the process for transferring the IP into your spouse's name? How would the banks view this?

Thank-you for your help.

[RPI]

Selling an Ip should always be a carefully considered proposition. It is generally land that increases in value so the more land titles you hold the better. However it can make sense to sell Ip to fund PPOR renovation. There are some posts about this in my recent one about going against you're beliefs.

If you're looking at 6 years in the future you may be able to hold and refinance you're IP to fund you're reno. The cost of not being able to deduct you're PPOR repayments may be more then the CGT implications for selling. Taxation benefits should be a bonus in investment not the driving factor. It does sound lik you have run some scenarios so consider it carefully and do what's right for you keeping in mind you're long term goals.

If you sell it a bove market value to you're trust you still have to finance and chances are the financer will value the property. They will only lend according to their valuation.

You may be able to sell and buy a new one after the reno is finished. Chances are the scenarios are endless and you just have to way up what's best. Good luck

Darryl