My PPOR and IP question

I couldn't work what to do, so I post the question here:

My PPOR is a bit too small so I want to buy a bigger house as new PPOR. And I also want to rent out current PPOR. I almost paid off current PPOR. I don't want to have huge loan on new PPOR. So, what are my options. No point to have a huge loan on PPOR while having positive gearing on IP.

I was thinking to sell current PPOR to my company then use the money to buy new PPOR. Then I buy back the property (current PPOR) from the company as a rental property. But this would cost a lot money.

Any ideas would be appreciated.
 
Hi Chris

This would have to be one of the most asked questions i for one get asked by clients and regretfully their is no easy cheap answer.

One consideration is to sell the property into a Trust structure and borrow 100% of the value of the current PPOR. (No need to sell it back to yourself.

An action whiich will incur Stamp Duty charged at the investment rate in Qld.

The other option is if the property is held Jointly is for the owner with the higher marginal Tax rate to buy the shares off the other owner under the "love and affection" clause of the Stamp Duties Act whilst it is still your PPOR.

In your case however with the property almost paid off you would only be able to buy 50% of the property and therefore claim interest on this amount as a Tax deduction.

This is one reason why interest only with 100% offset account gives you flexibility.

Your Mortgage Broker should be able to assist you wiith the re-structure.
 
Hi Chris
The other option is if the property is held Jointly is for the owner with the higher marginal Tax rate to buy the shares off the other owner under the "love and affection" clause of the Stamp Duties Act whilst it is still your PPOR.

In your case however with the property almost paid off you would only be able to buy 50% of the property and therefore claim interest on this amount as a Tax deduction.

Thanks Richard.
IF the value of the property was 150K 10 years ago, and now the value's increased to 500K. This "50% of property" means 75K or 250K?
Thanks again.
Chris
 
Hi Chris

$250K as you are purchasing 50% of the current market value.

Normally we use either a letter from a Real Estate Agent to accompany the Transfer form or a Bank valuation whichever works out more favourably.

Once the PPOR has been restructed then financing the new PPOR.
 
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