Equity to purchase second home???

MGHB · 24th Jul, 2013

Can anyone please offer me some advice.
My husband and I currently own our home outright and have a line if credit on this so we have access to the equity in the property.
We have just purchased another property that we intend to be our principle place of residence, and we will rent out our current home.
With our savings and equity we can pay for our new home without the need of borrowing further funds.
Can anyone please advise if this is the best approach to take, and are there any financial or tax implications of using the equity rather than getting finance on our new home?

Any help is appreciated.

ZachAnSel · 24th Jul, 2013

MGHB said:
Can anyone please offer me some advice.
My husband and I currently own our home outright and have a line if credit on this so we have access to the equity in the property.
We have just purchased another property that we intend to be our principle place of residence, and we will rent out our current home.
With our savings and equity we can pay for our new home without the need of borrowing further funds.
Can anyone please advise if this is the best approach to take, and are there any financial or tax implications of using the equity rather than getting finance on our new home?

Any help is appreciated.

From tax point of view, you won't be able to deduct on interest payment.

Try run the number to sell first property and use the money to pay new one.

Rolf Latham · 24th Jul, 2013

Hiya

You may benefit from a spousal transfer or a transfer to a unit trust, so as to "regear" the old PPOR, making it an IP with max debt.

The finance side of that isnt hard, but often you need to pay stamp duty for the transfer and the payback can be excessively long.

Id suggest have a chat to Mike Armstrong from www.houseofwealth.com.au who will be able to navigate you through the tax side of this minefield.

ta
rolf

Aaron_C · 24th Jul, 2013

As you are in Melbourne you should do a spousal transfer and regear the loans.

Terry_w · 25th Jul, 2013

If the property is in VIC then you or your spouse could sell your share to the other at full market value. The purchaser could borrow to purchase the share of the other. This could be done without stamp duty, but needs to be set up property so the interest is deductible.

You need both legal and taxation advice.

Equity to purchase second home???

More options

MGHB

ZachAnSel

Rolf Latham

Aaron_C

Terry_w

Similar threads