Moving into IP after being laid off

From: Denise Macadam


Greetings Forum,

I could use the benefit of your collective wisdom and would welcome any suggestions.
The good job(well paid), i didn't enjoy it that much! has gone now and the very small retrenchment package will not last too much longer. Am putting my PPR up for sale, will get about $470,000 - $480,000 - should walk out with about $300,000 in the hand - moving into my Ip down the road.
Learnt a good lesson here about highly negatively geared properties!
I am sure the bank will want me to pay some of the mortgage down so am hoping about $50,000 will do it for them - will sit the rest in a line of credit against the house and change mortgage to I.O. Will be adding a bedroom to make it 3 Bed/room and a back deck - installing an en suite between two bedrooms and gutting the current bathroom and redoing that - carport - painting inside and out - landscaping etc, with me doing everything i possibly can and assisting others when needed.
It is currently a gorgeous two/bed queensland cottage about 30 seconds walk to the heart of one of the trendiest areas of Brisbane, currently rents $250.00
Have looked at renting out the current PPR - but only have about $80.00 a week after all expenses are covered, and no money to pursue my first love "renovating"
Have been wanting to sell and cash up for some time now and do the buy(live in) - reno and sell. Will stay in what is currently an Ip for about 12 months and should then walk out with $100,000 cash, so $400,000 to take to the Sunshine coast where we wish to move and do the same thing. Hubby is in real estate but wants to get out of that in 12 months and get a life. Am very excited about it all and thank you to the "crap employers" for setting me on this path.
I thought i should have the Ip valued before we move in and then after the reno has been completed.
Would i be correct in thinking the CCT will be based on the value of the property when it ceased to be an I.P. - It then becomes our PPR for 12 to 18 months and will be worth considerably more then, than when we move in, is this the right way to go about it?. Get the valuation before we do anything to it. Will look at renting it out for 6 to 12 months. We will either move directly to the Sunshine Coast and rent there first to make sure this "sea-change" is what we really want to do, or i may do another move in and reno and sell in Brisbane and rent the IP again,should then get about $380.00 - $400.00 a week for it - paying enough to make it neutrally geared.
I would like to hear from anyone who has been in a similar situation and how things turned out for you, and any comments you may have for me.
I am going to get a bit of casual work but will be mainly working on the houses. This is really what I love doing so am very very pleased hubby has finally repented and willing to sell the house. I have no problems with selling, have been trying to sway him into this for twelve months and now circumstances have changed and really need to do something. Please don't think i see this as a backward move - far from it, i cant wait to start the reno journey and have never been happier. I have ripped out two bathrooms in my house this last fortnight, have had three stitches in one finger and a big gash on the knee, straight back into it and loving every minute! Had half a day to spare, ripped up the kitchen floor and the tiles of the splash backs, as you do - I wish i was out of work 20 years ago!
Do you have any thoughts on renting, as many Forum members do, and using the $400,000 for buy sells - i guess i am a little traditional in the respect i would like to have a home base, all be it a cheap one that I can do up and perhaps buy something around the $200,000 and reno and sell.
Husband is on $52,000 plus bonuses so not a huge wage and one of us has to keep a wage coming in so the banks will still talk to us, and he may not earn the same amount when he moves to some other line of work.

Any comments are always appreciated - 12 months of reading this forum and devouring reno tips and stories - hopefully I will have my own to tell before to long. Someone once said buy and holds are like watching grass grow - gosh i agree. Have realized I am an "action woman" and need to wear myself out a bit before I go back to buy and hold - perhaps when the injuries become to much!

Have to go and pull some cupboards of the wall now,
Denise
 
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Reply: 1
From: Dale Gatherum-Goss


HI Denise!

Congrats on the shift in your thinking and good luck with the future, it should be a wonderous time.

As for the CGT question you asked:

"I thought i should have the Ip valued before we move in and then after the reno has been completed.
Would i be correct in thinking the CCT will be based on the value of the property when it ceased to be an I.P. - It then becomes our PPR for 12 to 18 months and will be worth considerably more then, than when we move in, is this the right way to go about it?. Get the valuation before we do anything to it."

I would have the house valued at the time you move into it. This way, you leave your options open should you sell it and there will be good accurate information available to reduce your tax.

If possible, ask the valuer or the estate agents to place the lowest possible realistic value on the house to reduce the tax as well.

Good luck

Dale
 
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