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Q: We are looking at buying a home and living in it for now. We will basically have no mortgage on the property. In afew years time we will look at renting that property and moving to another. Is there a way to set this up so that we transfer the money from one property to the other to maximize negative gearing?
A: Hi Sarah,
It is the reason that you borrow money that determines if it can be deducted or not.
So in this case you would need to borrow to purchase the home you plan to live in initially even though you do not need a loan to purchase it. Make sure the loan has an offset account and place your surplus cash in the offset to save on interest.
When you are ready to buy your next home and rent the first one out you can draw the funds from the offset to put toward the purchase. The interest on the loan on your original home will now be deductable.
The offset account is important. If you place surplus cash directly into the loan then re-draw to make the next purchase the purpose of the loan (buying your next home) will determine that the interest it is not deductable.
Your accountant or a mortgage broker with experience in property investment will be able to help with this.
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Q: We want to use our Super to purchase Land and we don't have enough in Super, can we use what we have for a deposit?
A: Hi Nathan,
Firstly you would need to have a self managed super fund to purchase property.
A couple of questions for you.
- is your super in a smsf already?
- once you pay the deposit what next?
- how will you settle the purchase?
- if you borrow in the smsf where are the funds to make interest payments coming from with no rent coming in?
Sorry for all the questions but there is not enough information here to provide a good answer to you.
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Q: If I am refinancing to another bank, will I need to pay stamp duty?
A: Hi Lewis,
No. stamp duty is paid when you purchase the property.
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Q: Can you see interest rates rising in 2016?
A: The RBA has flagged that they are comfortable to go lower if needed.
From the Feb RBA meeting - “Continued low inflation may provide scope for easier policy, should that be appropriate to lend support to demand.”
If this will be passed on by lenders is another question altogether given that most lenders have increased rates independent of any moves by the RBA in recent months.
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Q: Can anyone recommend any really good home budgeting tools? I used to bank with CBA who offered some really good tools that integrated with my accounts but my new provider doesn't have anything like this.
A: Hi Micah,
We personally use Pocketsmith which is an online budgeting and personal finance service. The company is New Zealand based.
We particularly like the ability to import transaction records for all our bank accounts and then categorize each transaction (Groceries,
Electricity, etc...).
Categories are all customizable and results can be exported to CSV or you can set budgets in the software itself.
Best part is that as we categorize transactions for new services the software learns what to do with the same transaction next time.
There are paid and free plans and the software has continued to develop since we discovered it 2.5 years ago.
Good luck with your search.
