Help need please for new investors.."confused"

[KDW]

Hi everyone,

I am a long time luker and first time poster

My husband and I would love to purchase a new bigger house and keep the one we are living in as an investment property.

This is where the confusion starts.

My husband fully owns the house we live in, he bought it before we met. So obviously its in his name. Due to now having a bigger family we would love to buy a bigger house and keep this as an investment, as it would make a perfect IP

We have been told we can re-morgage the house he owns to buy a new house and claim tax benefits from the IP.
Others say we cant.

I am the lower income earner and I have read on this site that I could purchase the house from my hubby, and he purchase the new house.

I hope you understand what i'm trying to say.. lol..its confusing even trying to write the questions..

I guess what i'm trying to ask is, is there anyway around keeping this house and purchasing another without having to pay too much tax.

We have changed our minds so much over the past 4 months about buying and selling, and now is the time to do it as our son starts school next year.

Any help would be appreciated and if more info is need, i'll reply a bit later, we are off to look at houses...lol..

Kaz

 

[Jamie M]

Hi everyone,

I am a long time luker and first time poster

Welcome aboard

We have been told we can re-morgage the house he owns to buy a new house and claim tax benefits from the IP.
Others say we cant.

Firstly - I'm not an accountant. Here's how to think about this - if you were to borrow against your husbands house, what will those funds be used for? Your new PPOR right? Which isn't an investment - therefore, it's not deductible. So I'm with the "others" - you can't.

I am the lower income earner and I have read on this site that I could purchase the house from my hubby, and he purchase the new house.

A spousal sale might be possible. An accountant will advise on your options and the costs involved.

Cheers

Jamie

 

[KDW]

Thanks Jamie for the welcome and advice,

I guess the only way around is to sell our home, buy another PPOR then an IP. I thought that would be the outcome but with so much conflicting information its confusing?? We've been to accountants and Morgage lenders, all had good advice.

We'd started out just looking for and IP then with so many nice houses around that we could afford, buying an IP quickly turned to buying another PPOR, with the hope of keeping our home as an IP.

 

[Rolf Latham]

Hi everyone,

I am a long time luker and first time poster

My husband and I would love to purchase a new bigger house and keep the one we are living in as an investment property.

This is where the confusion starts.

My husband fully owns the house we live in, he bought it before we met. So obviously its in his name. Due to now having a bigger family we would love to buy a bigger house and keep this as an investment, as it would make a perfect IP

We have been told we can re-morgage the house he owns to buy a new house and claim tax benefits from the IP.
Others say we cant.

I am the lower income earner and I have read on this site that I could purchase the house from my hubby, and he purchase the new house.

I hope you understand what i'm trying to say.. lol..its confusing even trying to write the questions..

I guess what i'm trying to ask is, is there anyway around keeping this house and purchasing another without having to pay too much tax.

We have changed our minds so much over the past 4 months about buying and selling, and now is the time to do it as our son starts school next year.

Any help would be appreciated and if more info is need, i'll reply a bit later, we are off to look at houses...lol..

Kaz

Hi Kaz

Unless the house is a FLASH place with development potential or some other magic, turning it over for a new PPOR is possibly the most likley outcome if you take a big step back and look at your situation objectively.

Its clear to me, that to this point, you have no particular plan, otherwise you would not have been tempted to buy a new PPOR instead of an IP

A spousal sale in your circumstances seems not warranted due to the low taxable income that you have ( assumption).

Rather than look at "fighting" for what might be a "totally emotional" decision, id suggest you do some goal planning and see what you want to achieve financially over the next 10 to 20 years, and then come back to this decision.

I get this a lot in my client base when we first spend time analysing some basic ( but often confronting questions) , where people will put a strong handbrake on their financial performance due to debt structure or asset selection that isnt thought out but FELT out. Dont discount gut feel, but dont fully rely on emotions either, because they can often be sneaky things.

Dont be one of those, now that you are here, and you have come through that curtain, dont go back.

PS Your friends that say this or say that about whats possible...................

Firstly, spend specific time with those that have something like what you might want ( an IP portfolio ????) and take advice from those that have been succesful. After all, you would not usually chase a plumber for advice on IT.

Get clear in your mind what you want, and then find a way to get it. Chances are very very high that this will not exist within your current circle of friends and associates and you may have to step way out of your comfort zone.

ta
rolf


ta

rolf

 

[Aaron_C]

I think you are a bit overwhelmed with the potential issues here - tax, finance and overall strategy. A spousal sale probably won't help here because you will have to pay stamp duty on it, which is quite high in NSW.

As rolf suggested talk to some other people you know who have invested in properties, whether it be on this forum or in your own circle of friends, and talk it out with them to get a general idea. You really have to narrow down what you want out of this situation. Do you want a new place to live? Do you want to build an investment portfolio?

For what it's worth it can make sense for your husband to keep the current house as an investment, and then buy the new house for you to live in. The new house doesn't have to be in his name, it could be in yours, or in joint names. For example if he's self employed it may be prudent to keep the new family home in your name for asset protection etc.

 

[KDW]

Thankyou so much everyone for taking the time to give your advice, I have spoken to friends about IP's who have them but everyone is in a different position which makes things a bit harder to understand. It was because of that, I decided to ask peoples advice on here.
We've decided to just take our time and keep looking and see what happens. Money is a factor as well, our PPOR at the moment is worth $350K if we purchase a new PPOR for the same price (at this price it may need some work) we will keep the 1st PPOR as an IP.
If we decided to spend around $500k on a new PPOR then we will sell the PPOR we're in.. whew!! hope that makes sense...lol

Anyway thanks again everyone, i'm sure i'll be back to ask more questions and let you know where we're up to..