Is this bad

[1911naomi]

I am desperate to buy a ppor and move out of this house I currently have.

It's a 2 story house, we rent out downstairs as has all facilities with own entrance And live in one bedroom area upstairs (own facilities) (dual living).

We want to buy a new house as living there with a baby and 2 dogs is driving me crazy.

Anyway I want to use equity from 2 ips to use as deposit for ppor

I would just do a sup loan off both investments

How naughty and complicated (tax) is this

 

[tobe]

its naughty because you are buying and borrowing for consumption, your PPOR, rather than investment. It will hold you back on your investment journey because of the reduced cashflow due to the new mortgage payments, and the reduced equity that you are borrowing out for the deposit.

That said, you have to live right? one alternative might be to rent somewhere nice? See if you can do that for 6 or 12 months before you commit to buying perhaps?


Be careful with the 'Sup' loans. Make sure they are standalone, and seperate to your existing tax deductable facilities. If there is a chance the new property will turn into an IP down the track, set up IO and offset for the new loan.

 

[marg4000]

Not naughty at all.

But the interest won't be tax deductible as the purpose of the loan is to buy a PPOR.

This could change if the PPOR ever became an IP.
Marg

 

[geoffw]

I vote not naughty.

While you are not getting rent and not getting tax deductions on mortgage interest payments, you are avoiding paying rent for somebody else's asset- and you have a property which is free of Capital Gains Tax when you sell.

Buy something adequate but don't over capitalise.

 

[mikezen]

U live on the goldy Naomi, lots of cool places to rent and live, I know , just change area and house and give it a go, ud be surprised at what a small change can make

 

[Scott No Mates]

• Keep your loans separate
• do not x collateralise the loans
• take it as Interest Only to minimise repayments
• Do not mix your loans up (ie contamination between deductible and non-deductible debt)

 

[1911naomi]

Thx

Thx guys. I know it could hold me back in regards to buying more ips.

I would on return rent out where I currently live

Husband doesn't want to rent, I've had a look at rentals anyway over last few months for nothing good- either over what I'd be willing to spend or old places.
(Has to be a house as have two dogs)

Anyway atleast I know it's an option

And I'm living right under the flight path - fun times.

On a good note of u fly in or out of Gold Coast ull see me waving off my balcony

 

[Beanie Girl]

Naomi, just don't jump off the balcony!

 

[Jamie M]

I don't see an issue with it. There's more to life than worrying about a growing IP portfolio.

As long as the loan structures are set up correctly and you don't mix up deductible/non-deductible debt then I'd go for it.

Besides, your new PPOR might go up in value - providing you with more equity to play with.

Cheers

Jamie

 

[bcole2012]

My vote also goes for not naughty. You seem like you're now at a different stage of your journey and this would be a good time to take stock, enjoy living for a bit and save up for your next investment.

 

[1911naomi]

Yay

Ok makes me feel better. Won't rush Into anything but it's an option that is not too bad a decision.

Not much out there anyway at the moment that I'm interested in

Would try and buy something to Reno maybe so get equity

Anyway thanks very much