We sold our house in Onehunga in 2006 because we were freaking out about how to pay the mortgage when our rate was due to go up from 6.9% to 9.5%. We've been renting ever since and are horrified at how hard it is going to be to get back in the market.
We currently pay rent $495 a week and feel this is JUST affordable (in fact we are really going backwards as we keep dipping into our deposit savings to pay for stuff - kid's teeth, replaced car, etc)
I just wanted to run a scenario past you all and would welcome any feedback you may have.
We have 120k in funds
single income is 86k
we have no debts (credit card limit is $500.00 yay!)
(we have a good super scheme through work)
We are thinking about buying a rental (Maybe for a family member to live in ).
Is my logic/thinking accurate on this: (figures are really general)
buy a 350k rental prop (ob not in Auck!!!!)
pay interest only @ average 8%/ year - so 28k per year, minus income potential of 15k
so cost of ownership is 13k (which we can deduct through LAQC off income) Hopefully we can get that cost up higher...to reduce against the income of 86k
so new taxable income would be 73k. tax on that should be roughly 24k where we are currently paying 28k. so our cashflow would improve by 4k a year or 77 a week
we could then add the 77 a week to our rent of $495 giving us $572 a week to service a mortgage on our own home.
Also if we could get our new taxable income down under the 70k mark I think we would be eligible for a tax credit too... which would make home ownership a distinct possibility for us in Auck again.
All thoughts gratefully received. (As you can see from the above I am a total novice to this so would appreciate any help you can give)
keenbean
We currently pay rent $495 a week and feel this is JUST affordable (in fact we are really going backwards as we keep dipping into our deposit savings to pay for stuff - kid's teeth, replaced car, etc)
I just wanted to run a scenario past you all and would welcome any feedback you may have.
We have 120k in funds
single income is 86k
we have no debts (credit card limit is $500.00 yay!)
(we have a good super scheme through work)
We are thinking about buying a rental (Maybe for a family member to live in ).
Is my logic/thinking accurate on this: (figures are really general)
buy a 350k rental prop (ob not in Auck!!!!)
pay interest only @ average 8%/ year - so 28k per year, minus income potential of 15k
so cost of ownership is 13k (which we can deduct through LAQC off income) Hopefully we can get that cost up higher...to reduce against the income of 86k
so new taxable income would be 73k. tax on that should be roughly 24k where we are currently paying 28k. so our cashflow would improve by 4k a year or 77 a week
we could then add the 77 a week to our rent of $495 giving us $572 a week to service a mortgage on our own home.
Also if we could get our new taxable income down under the 70k mark I think we would be eligible for a tax credit too... which would make home ownership a distinct possibility for us in Auck again.
All thoughts gratefully received. (As you can see from the above I am a total novice to this so would appreciate any help you can give)
keenbean
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