Selling up, renting and buying IP.

Thanks MrMonopoly.

So next, once the rental stuff is organised, what should I be looking at doing next.

I know that we will be changing the loan to IO, so for that one we will get our mortgage broker out to sort it for us. Next we have to make sure we get a depreciation report done on the property. For some reason, I am thinking we need to get a valuation done but I can't remember why?

More talk to other REAs and looks like $430-450 is on the money.
 
AndrewT said:
Thanks MrMonopoly.

So next, once the rental stuff is organised, what should I be looking at doing next.

I know that we will be changing the loan to IO, so for that one we will get our mortgage broker out to sort it for us. Next we have to make sure we get a depreciation report done on the property. For some reason, I am thinking we need to get a valuation done but I can't remember why?

More talk to other REAs and looks like $430-450 is on the money.
Click to expand...

Honestly in my opinion only you're probably on the right track. I'd always recommend talking to a good broker first about changing to IO, then setting up a 100% offset account so you don't lose your already established habit of forced savings. This will also build a nice buffer over time to help with that SANF (sleep at night factor).

You may depending on your financial situation, risk profile and long term goals also want to consider refinancing out some of the equity established already in your PPoR, to also keep in the offset ready for when you to decide to venture out again into the next investment, be it a granny flat or new property altogether. Just make sure you're VERY diciplined and only use for investments.

The best thing I ever did was surround myself with a great team of expert advisors (brokers, solicitors, accountants, mentors, property managers etc). The great thing is that you will find many of them here on SS.
 
mrmonopoly said:
You may depending on your financial situation, risk profile and long term goals also want to consider refinancing out some of the equity established already in your PPoR, to also keep in the offset ready for when you to decide to venture out again into the next investment .
Click to expand...

Just be careful with this. Get good advice or you will lose deductibility and contaminate the loan.
 
I think renting out the place may be a good idea. You can retain it CGT free and can always sell down the track if you need to.

Changing the loan to IO and setting up a 100% offset is the right way to go. Put all rents in the offset and all incomes and this will save you interest.

Make sure you claim all depreciation and the valuation won't be needed for tax purposes as the property will remain CGT free. If it ever ceases to be your main residence then a valuation would be needed as CGT would then apply from that time on.
 
Terryw said:
Just be careful with this. Get good advice or you will lose deductibility and contaminate the loan.
Click to expand...

So who would be the best person to go and see, we have a accountant locally here that we have used for tax time and he seems to know alot about the property side of things or should the mortgage broker be able to determine how we should go about this.

Can one suggest a good broker in Sydney? Currently we use Jamie from Prestige Mortgage in Camden. He has done us good so far and I know he actually owns a number of IPs in the area.
 
Having equity in the offset account sounds like a good idea, the only way to contaminate this would be to use it for something other then the purpose of investing or repair on the current IP???
 
AndrewT said:
So who would be the best person to go and see, we have a accountant locally here that we have used for tax time and he seems to know alot about the property side of things or should the mortgage broker be able to determine how we should go about this.

Can one suggest a good broker in Sydney? Currently we use Jamie from Prestige Mortgage in Camden. He has done us good so far and I know he actually owns a number of IPs in the area.
Click to expand...

You need tax advice and this is something most brokers are not licensed for.

Just think it thru logically and you should be right. Deductibility depends on what the borrowed money is used for. Borrowing to invest in a savings account or an offset account is not investing so that is your first potential problem. The second problem would arise if you are borrowing and temporarily park the money with other non borrowed money in a savings/offset account.
 
Congratulations Andy! :)

In regard to your valuation query: Yes, get one done from a licensed REA. Reason being, if you do ever sell after the 6 year PPOR rule and are up for CGT, The amount will be based on the valuation from when it started being a rental/investment property and you will be taxed on that.
 
Initially when we bought the property we had it rented out because we were first home buyers and wanted to get some more funds together, back then my partner was on very low income and I was working 7 days a week to get through!

We made the mistake, I think, of not getting a valuation done when the renters left and we entered the property. There was a valuation done only a couple of months ago before the last of our renovations and the property was valued at 399k.

So in this case, the initial purchase price of 345k is used and the 'profit' is calculated from that? Hopefully, this won't ever be an issue and we won't have to let it go.
 
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