Shifting equity advantages?

Question from Chieu updated on 14th February 2014:

In regards to the' "Hold or sell now" posting, what are the advantages of refinancing your investment property when the market is at its peak and moving any increase in equity to downsize personal home mortgage? Is this for tax purposes? I was told that the tax "calculation" at the end of financial year was done on the original purchase price? Thanks!

Our expert Ron Hoy Fong responded:

Yes you are correct about tax calculations however shifting equity around is also about sleeping better at night, particularly if you are a baby boomer and trying to be as debt free as possible.
It can be a good move to shift any surplus capital that was originally deposited into your rental property and any after tax paid profits plus new equity acquired into your own home. Also, have your bank cancel any cross-collateral ties it may have between your home and investment portfolio.
This would put you in a strong position to increase further borrowings later on your home so you can then purchase more properties with different lenders during a falling or flat market which generally follows the boom period.

Ron loves to share his passion for property and his coaching course provides one-on-one mentoring and support that will empower you with tools, strategies and valuable insights so you can achieve investment success and become a property master.

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