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Using current house as first investment property

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  • Using current house as first investment property

    My wife and I are keen to enter the property investment market and came across this terrific site. I have a house with a small mortgage a few 15kms from a large town which we would like to move to. We have been looking at properties to invest in or live in. Nothing so far. We have discussed renting our current 4 bedroom house ( low maintenance)out as our first investment and purchasing and living in the town we want to move to. From a tax and an investment point of view, does this make sense.
    Ideas appreciated.

  • #2
    Welcome Rocks

    We did something similar when we started out. We shifted to another town for work and could not sell our house. We decided to rent it out and buy one to live in where we had shifted to. We were able to set up an LAQC and sold the existing property to the company. In this way we were able to have a 100% mortgage on the company property and a lesser mortgage on our new home. We still had the same total debt but were able to get a greater tax advantage as well as starting us with a vehicle for property investing. Every situation is different however and I would recommend first investing a little time and money with an accountant (who is experienced with property investing matters) to get it right. But bottom line - yes it is an option worth considering.

    Accept the challenges, so that you may feel the exhilaration of victory - General George S. Patton


    • #3
      Anyone recommend a good property accountant?

      Thanks for that Gobbers. I have read a bit about the LAQC's and it sounds like the logical thing to do.
      Can anyone recommend a good property accountant/ lawyer for Richmond/Nelson area?


      • #4
        Have you tried our 'referral's page - see link in menu - on your left. In the referrals you can select the area and type of professional and get the names of the professionals propertytalk users recommend.

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        • #5
          Using your previous own home as a rental.

          Yes it is certainly a great idea for many reasons.

          It gives you time to see if you have made the right decision in moving and if not you can still go back.

          If you home is low maintenance it should be a good rental as long as it doesn't have a big garden. Tenants don't know what weeds are!

          Just be aware though that you understand that your home will not be kept as nice as you had it and that tenants will not look after your rose bush or your nice curtains the way you did. Emotionally it can be quite an experience to see your own home deteriorate.

          As far as entity structuring is concerned, I would encourage you to seek at least TWO opinions. The main aim is to get both the asset protection right for you and your family situation and get the tax advantages structured to make sure that all the taxable activities are loaded on to the rental property.

          Nowadays with modern technology it is not so important to have your advisers live in your home town. I live in Wellington, my accountant is in Christchurch, one of our lawyers in Auckland. Mortgage Brokers all over the country.

          An LAQC is a LOSS Attributing Qualifying Company and has its own advantages and disadvantages. A LOSS company may not be ideal for you. I would recommend Garth Melville from Company Solutions in Auckland.

          To success, Dorien.