Are we better off selling our unit to pay off our building loan,
and then buy another property for investment?
Q.
I have bought a block of land and intend to build a new house in
the next twelve months or so. We currently live in a unit, which we
own outright, and which is worth about $300,000. Are we better
off selling the unit to pay off the building loan, and then
buy another property for investment? We had intended to keep the
unit as an investment property when we move into our new home. Are
there any other options we should be looking at?
A.
It is not a good option to keep the unit unless it has
exceptional capital growth potential because you will be paying tax
on the rents while having a large non deductible mortgage on your
own home. A better option is to sell the unit and use the proceeds
to put towards your new home. You can always borrow back for
investment in the future and the interest on this new loan will be
100% tax deductible.
Each week financial advisor Noel Whittaker answers your
questions.
