Buying new property while renting existing property

Hi,

Could anybody offer me any advice on the following circumstance.

My wife and I own our current property outright.
Our current house is on the market in a subject to sale agreement on another property.

We are considering keeping our existing house, borrowing more money to cover the cost of the next property.

We would then rent out our existing property while living in the next property.

Would it be possible to treat our first property as an investment property?

Thanks
Gerard
 
You COULD do that...

But wouldnt be very tax effective.

As you would be borrowing funds that wouldnt be tax deductable for the purchase of your new house.

You would be receiving income that would be taxable through rent of your existing property.

Financially can be better of selling your current home, purchasing new PPOR with the cash, then leveraging into a new investment property.

Obviously I dont know your personal situation or where you have invested/live, so just general info.


Also need to consider costs in buy/selling.

And big one to remember is that you are wanting to rent out your current property as an investment...
Is it the best possible investment you could have? Would you be better having an investment property in a different location? better CG potential? higher rent?
You purchased your current property as PPOR you may not of had your investor hat on when you purchased!
 
What Brady said

One option is to do a spousal sale or a sale to a unit trust if there is a logical reason why you want to keep the place.

This would resuklt in re gearing the exist ppor and release funds to buy the new place in a tax effective manner.

Obviously there are a bunch of considerations incl current taxable incomes and the payback period of the stamp duty costs


Sounds complicated but is not once you get your head around it

Speak to your broker or banker about how to go about it

Ta

Rolf
 
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