Options for sale of property

[Ooz]

I felt this could go in a number of threads, but my real focus is how to minimise my tax and maximise my wealth, so here it is.

I recently moved from my PPOR in Sydney, which is debt free and I've owned it for 15 years so the capital growth is great.

I have just purchased a new PPOR in Melbourne, and am thinking of selling the Sydney PPOR to reduce debt on the new PPOR. Financially, I don't have to do this, but from an investment perspective I think it generates the best return/wealth. Alternatively, I could keep the property and rent it out. I know the full details and history of it and it is the type of property I would add to my investment portfolio if I was buying.

But I'm wondering if there is something I'm not considering, that perhaps I should? e.g. using a trust structure? Something else?

Any suggestions appreciated!

 

[skater]

If you sell, it will be CGT free. If you don't sell, then get it valued so that you reduce the CGT in the future.

 

[Terry_w]

I felt this could go in a number of threads, but my real focus is how to minimise my tax and maximise my wealth, so here it is.

I recently moved from my PPOR in Sydney, which is debt free and I've owned it for 15 years so the capital growth is great.

I have just purchased a new PPOR in Melbourne, and am thinking of selling the Sydney PPOR to reduce debt on the new PPOR. Financially, I don't have to do this, but from an investment perspective I think it generates the best return/wealth. Alternatively, I could keep the property and rent it out. I know the full details and history of it and it is the type of property I would add to my investment portfolio if I was buying.

But I'm wondering if there is something I'm not considering, that perhaps I should? e.g. using a trust structure? Something else?

Any suggestions appreciated!

You can consider selling to a related party who can borrow 103% to buy it and then claim the interest. Related party could be a spouse or a trust you control - but naturally there are many issues so get advice.

 

[Paul@PFI]

You can consider selling to a related party who can borrow 103% to buy it and then claim the interest. Related party could be a spouse or a trust you control - but naturally there are many issues so get advice.

If the related party acquires 50% and its your PPOR at that time in NSW there is no duty. One of the few concessions in the state of generosity. Then you use the cash arising from the 50% sale and pay down the new home.. Net effect is new loan that is now tax deductible on former home to buy the new home.

That said if you sell and release the cash tax free to invest (and paydown new home) you have a unlimited range of options / strategies. One may include super if your age warrants it. The low tax rate or zero tax rate may be a strategy for 50s'++

 

[Ooz]

Thanks - some good suggestions and worth further thought before a straight sale.

 

[Greg Reid]

Minimise tax and maximise wealth.
Debt free existing PPOR in Sydney turned into an IP, presume positive rent return to add to your existing income and resultant increased tax effect. The new Melbourne PPOR will have borrowed funds, non tax deductible debt.

Neither are ideal to achieve the goals above. Selling to a related party may be an option or selling it outright (no CGT) and using the funds to reduce the new debt on your PPOR. Once you have done that and if you are in a position to, refinance it, have a separate IP loan facility and purchase an IP (or more) that suits your goals or as Paul suggests, consider a super contribution as a part of that strategy.

Do some after tax numbers to see what would give the better outcome.

 

[GreyGhost]

get advice from your accountant as to which property to select as your main residence moving forward (that is if Melbourne qualifies as a main residence as your have said).
Best not to look at this in isolation as to any potential cgt liability now or in short to medium term, but as part of your retirement strategy and equity forecast on both properties

On face value, no cgt liability on Sydney at present, just need to weigh up Melbourne and Sydney moving forward.