Bonjour,
Shall I sell or keep? I already have an idea of the answer but wanted to ask some of the minded ppl on this forum to confirm.
We have a unit in OZ and want to know if we should sell or keep it as we move back overseas.
Boughts $495k in 2015 - 2018 value is $455k approx
To keep it, with a scenario of IO at 7%, it would cost us approx $22k per year (we wouldn't be able to claim rental loss anymore) - becomes $17k in 10 years if the rent increases (3%)
The idea is to leave $150k AUD in offset here in Aussie land to prevent us from using our euro salary, at least for the beginning. We hope the market will eventually pick up again (IP in New Farm, QLD) eventually.
Option 1:
We sell. We loose $40k straight + time for us to repay interests on those.
5% of fees for selling, etc... Another loss of $25k
So $65k loss - outch
We take our $85k ($150k - 65k) That we invest wisely in index. At 6% theory we should $150k approx in 10 years.
It's tough, we all make mistakes throughout the years, we move on and continue our investment journey
Option 2:
We keep the IP
We leave $150k in offset
If IP grows 3% per year, it should be valued at $600k in 10 years worst case
We pay CGT when we sell
So:
-150k on the offset
- 40k to fund the rest of the rental loss (most prob for our euros)
+ 200k capital gains
- 100k CGT approx (should be less)
- 30k fees (5%) resale
TOTAL loss= 120k
NB1: Some would say that the loss should equal for even more because I have "lost" $65k of returns I could have taken into the bank by placing the $150k in shares instead of leaving of the offset account.
NB2: I believe that the loss would be reducing more after 15 or 20 years, where eventually it would start to make some financial sense, but man... that's a VERY long time to see some theorical returns!
2 questions: Have I forgotten anything in the calculations - I know a lot is theorical? Which option will you chose?