From: Jay Hunter
Hi,
I'm sure many people have come across this problem before:
I buy my first property (A) as a place of residence (1 bed unit and live in it) and say its worth 300K. I then buy an IP (property B) for say 250K and borrow the full amount (using equity in my residence for the deposit.). Now assuming I have paid of all my debt on my home (A) but find I now want a bigger place and want to buy property (C) as a place to live (worth say 600K for example).
Question 1: can the 300K equity in (A) become equity in (C). therefore, I have a loan on my residence of 300K and a tax effective loan on (A) of 300K?
another way to ask the same thing: Do I have to sell (A) to get the equity out and be able to use that in (C)... and buy another IP being (IP D) ? (I know there will cap gain but disregard this for a moment)... for all the selling expense etc... if I have to do this would I be better or doing question 2 ?
Question 2: Would I be best to simply borrow a bit more and buy a place of residence that is going to last me longer (i.e. 2 bed instead of 1 bed) ?
sorry for the long note. any help would really help this confused head of mine
jay
Hi,
I'm sure many people have come across this problem before:
I buy my first property (A) as a place of residence (1 bed unit and live in it) and say its worth 300K. I then buy an IP (property B) for say 250K and borrow the full amount (using equity in my residence for the deposit.). Now assuming I have paid of all my debt on my home (A) but find I now want a bigger place and want to buy property (C) as a place to live (worth say 600K for example).
Question 1: can the 300K equity in (A) become equity in (C). therefore, I have a loan on my residence of 300K and a tax effective loan on (A) of 300K?
another way to ask the same thing: Do I have to sell (A) to get the equity out and be able to use that in (C)... and buy another IP being (IP D) ? (I know there will cap gain but disregard this for a moment)... for all the selling expense etc... if I have to do this would I be better or doing question 2 ?
Question 2: Would I be best to simply borrow a bit more and buy a place of residence that is going to last me longer (i.e. 2 bed instead of 1 bed) ?
sorry for the long note. any help would really help this confused head of mine
jay
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