Turns out that the better half has just found out that we are not in the zone for the high school she wishes to send our children to. (Just a couple of blocks away - typical!!) Apparently, the school also rejected something like 80 out-of-area applications this year, so the chances of getting in are slim.
So whilst we have a bit of time - our eldest is only just going into grade 3 - we've started talking (well, I listen) about how we get around this.
I see a few options:
- sell our PPOR and buy in the zone
- sell our PPOR and rent in the zone*
- keep our PPOR, convert to IP and rent in the zone*
- keep our PPOR, convert to IP and buy in the zone
*Neither of these are serious options according to 'the boss'
My challenge is that I don't think we can afford option 3 (and maybe not option 1) without some "creative accounting".
We have equity locked in our PPOR because we've been paying P&I (didn't really know about IO/offset at the time, although we do have an offset on the loan)
So what does the brains trust think of the following scenarios:
**It's in Brisbane, so may be a soft market right now. Happy to let this one go if necessary - it's done it's job - but obviously also happy to hold. I also need to verify the securitisation of this property to make sure that we get what we expect if we do sell... friggin' x-coll!
I know this is our decision, and it's largely a lifestyle choice, so hugely subjective. BUT, without either a) selling an IP to reduce the non-ded debt, or b) using some sort of debt recycling technique, I'm not sure we can afford it.
So, I'd like to hear what others would do/have done in a similar situation. Haven't spoken to our broker OR accountant yet, and certainly will do so in due course, but I welcome the input from the creative minds available here! *sucks up*
So whilst we have a bit of time - our eldest is only just going into grade 3 - we've started talking (well, I listen) about how we get around this.
I see a few options:
- sell our PPOR and buy in the zone
- sell our PPOR and rent in the zone*
- keep our PPOR, convert to IP and rent in the zone*
- keep our PPOR, convert to IP and buy in the zone
*Neither of these are serious options according to 'the boss'
My challenge is that I don't think we can afford option 3 (and maybe not option 1) without some "creative accounting".
We have equity locked in our PPOR because we've been paying P&I (didn't really know about IO/offset at the time, although we do have an offset on the loan)
So what does the brains trust think of the following scenarios:
- Sell PPOR and buy again
- Agents fees on the way out impact on net received, but CGT-free status is appealing
- Would result in increase in non-ded debt by approx $100-$150k
- May need sell an IP (approx $140k equity) to pay down non-ded debt, but would be hit with additional agents fees, plus CGT** - Keep PPOR as IP, buy again
- Buy new place, using cash/equity for deposit. (Maybe this time use the IO/offset option - bank permitting!!)
- Convert PPOR loan to IO and rent it out. Would result in approx $400pm CF+
- Take out LOC against equity in PPOR and use this to fund (capitalise) interest. The $400pm goes into the offset on the new PPOR - debt recycling
- Hold onto Brisbane IP
**It's in Brisbane, so may be a soft market right now. Happy to let this one go if necessary - it's done it's job - but obviously also happy to hold. I also need to verify the securitisation of this property to make sure that we get what we expect if we do sell... friggin' x-coll!
I know this is our decision, and it's largely a lifestyle choice, so hugely subjective. BUT, without either a) selling an IP to reduce the non-ded debt, or b) using some sort of debt recycling technique, I'm not sure we can afford it.
So, I'd like to hear what others would do/have done in a similar situation. Haven't spoken to our broker OR accountant yet, and certainly will do so in due course, but I welcome the input from the creative minds available here! *sucks up*