Join our investing community

Please Help!!! PPOR to IP and rent other.

Discussion in 'Real Estate' started by Sorrello, 12th Nov, 2009.

  1. Sorrello

    Sorrello New Member

    Joined:
    12th Nov, 2009
    Posts:
    1
    Location:
    Briabane QLD
    Need some help please! We currently own a property worth $311000 and owe $295000. Our mortgage repayments are nearly $600w plus body corp + rates $100 = $700 all up. We fixed in on the mortgage and we are struggling to make ends meet. (new to property market and got scared so fixed).
    Is there any way we can reduce our weekly outgoings and maybe rent a bigger property we have 1 child and a baby on the way. Our current PPOR is a 3br town house and can be rented for $350w. What tax breaks are there if any? Desperately need a better cash flow. Can't get out of mortgage as the break charges are way too high.
     
  2. jrc

    jrc Active Member

    Joined:
    3rd May, 2007
    Posts:
    32
    Location:
    Western, NSW
    Your deductions would include interest, rates, body corporate, insurance, property management, depreciation and building write off.

    Whether you will get a better cash flow is going to depend on a number of factors including what you will pay in rent.
     
  3. Tre

    Tre New Member

    Joined:
    18th Nov, 2009
    Posts:
    1
    Location:
    Sydney, NSW
    Negative Geared

    This definately sounds like the property is greatly negatively geared. Speak to your accountant asap about reducing your weekly tax and this should help with the burden.
     
  4. robmillion

    robmillion Member

    Joined:
    13th Jun, 2009
    Posts:
    13
    Location:
    Melbourne, Vic
    Set yourself a tight budget and stick to it. Increase your income?

    If you've been in the property more than 6 months, RENT IT OUT and enjoy the tax deductions. In the meantime, rent a cheap place until you get back on track.

    And remember, it's probably not as bad as you think.
     
  5. Jacque

    Jacque Team InvestEd

    Joined:
    16th Jun, 2005
    Posts:
    1,885
    Location:
    Sydney
    I'm sorry that you find yourself in this position. Choosing when to fix rates is always tricky, and sometimes we don't make the right choices. Why not revisit the lender or your broker to see if there are alternatives for reducing the break costs? They may allow you to make a portion variable, for a lesser fee, which will reduce the burden you're feeling.

    Also consider what improvements you can possibly make to the current PPOR to increase the rent as they are both depreciable (once it's an IP) and value-adding. Also look at other rental options that will make it easier on you. Can you move back in with parents for a short period or consider a unit or smaller dwelling in a cheaper area, even if only for a 12mth period, until you're a little more cashed up? Lots of children share bedrooms when they're young (I know I did until I left home!) and you could put some items in storage/parents house if space is an issue.

    There's almost always a solution if you're willing to compromise somewhere. Consider all options and best of luck!