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pro and cons of house being in one name only

Discussion in 'Accounting, Tax & Legal' started by voigtstr, 14th Mar, 2008.

  1. voigtstr

    voigtstr Well-Known Member

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    The unit that my wife and I are living in is currently in my name only. We intend the unit to become a rental once we buy a new house (which would be in both names)
    Are there any benefits to keeping the unit my name only?
    Are there any benefits to putting it in both names.

    We currently both earn about 50k, but in future years we expect some maternity leave and possible part time work for my wife instead of full time work.
     
  2. DaveA

    DaveA Well-Known Member

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    you could sell it to your wife and gain full tax deductions on the interest but as you said it depends on how long she plans to take off and if you can make it two half years or something....

    expertise is reccommended
     
  3. Billv

    Billv Getting there

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    Do you have a mortgage on it and if so is it big?
    Cheers
     
  4. voigtstr

    voigtstr Well-Known Member

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    The loan is at approximatly 166k we bought it for 180k, its now worth approx 210k (but will get it valued in the next few weeks, to see if there is any equity worth grabbing)
     
  5. Billv

    Billv Getting there

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    I see no benefit in transfering it into 2 names
    I would consider changing the loan to an offet type and IO if it's not already done and I'd leave it as is.
    Then concentrate on building up a deposit for the new PPOR.
    Since this unit is going to become an IP get a copy of the valuation and keep
    for tax purposes. Hopefully the valuation will be high...:)
     
  6. voigtstr

    voigtstr Well-Known Member

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    We are on a fixed interest for 5 years. It was the only way I could get a loan approved at the time (single income servicability) (got married since then). Because of the fixed interest we are still on 6.75%, so I really dont feel like refinancing and being on 9.5% or there abouts.

    The next ppor will definitely have the offset arrangement set up. We only need one offset dont we?

    To accelerate purchasing the next house we are intending on getting the equity (assuming its about 30-40k) and using that as the depost for a ppor of approx 250k. I know that the 30-40k loc wont be tax deductable for this purpose, but someone else worked out that it would only make about 800$ a year difference.
     
  7. Billv

    Billv Getting there

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    YES

    I don't know what your lender's rules are on this
    and if they will let you borrow that $30-40K without breaking the fixed term.
    It would pay to discuss this with them.
    $40K @ 8% is $62/week or $3,200pa before tax and if it was tax deductible and you got 30% back it would translate to a tax refund of $960pa

    Cheers
     
  8. voigtstr

    voigtstr Well-Known Member

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    Thanks BV. Not having that $960 is not much short term pain considering it enables us to have capital growth on two properties instead of one. Also my wife and I can save more than 960 comfortably a month. (when I get night shift pays I'm putting around 1700 into ING)
     
  9. Redwing

    Redwing Well-Known Member

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    Hi Viogstr

    Ou Bank has let us "Top Up" and acess the equity into a LOC in the past without breaking our FI-IO Loans at 6.98%

    Definitely do what BV said and get the first property valued when you move into the New PPoR