What should you do with your Sydney home when moving on?
Tue March 27, 2018
So, you've decided that it's time to move on from your current property and secure a new home in Sydney. Maybe you need a bit more space, or simply want to be closer to work. Regardless of your reasons for moving, every homeowner in Sydney that's buying a new property will have an important decision to make: whether to sell their existing house or hold onto it as an investment.
There are benefits to each approach, and in this article we'll take a closer look at both to make sure you have all the information you need to make an informed decision.
Repurposing your existing home into a rental is a great way to start a property portfolio.
Using your old property as an investment
Starting a portfolio of investment properties is a great way to consolidate your assets and create an additional revenue stream, but the process of building a portfolio can be complex. First, you'll need to find a suitable property, and then secure a mortgage for it. Simply repurposing your existing property into a rental is a great alternative, as all you'll have to worry about is moving your belongings out and into your new home.
There's also the benefits of knowing all the ins and outs of the property itself - an invaluable boon to landlords when it comes to meeting the needs of new tenants. Unlike if you'd simply purchased another property to use as a rental, you'll know all the work that's gone into keeping your old home in good condition, as well as any underlying problems such as recurring leaks that may need to be addressed again further down the track.
Of course, even if you do decide to use your old property as a rental, it's still possible to put it on the market in a few years time. This will provide you with the flexibility to sell when the market is strongest, while still generating a return in the meantime.
Selling your old property
On the other side of the coin, there are all sorts of benefits to simply selling up and moving on once you've secured a new home. In Sydney, if you've been in your old property for a number of years, it's likely that the house has experienced a substantial increase in value, which can make it incredibly enticing to sell and use the profits in other ways. If you'd still like to start a property portfolio, selling your Sydney home can provide you with cash in hand that can then be put towards other investments - even multiple properties in more affordable suburbs.
Homes are exempt from capital gains tax until they begin creating an income.
It's also important to remember that holding on to a property and using it as a rental will affect the amount of tax you pay. Homes are exempt from capital gains tax until they begin creating an income, so if you're not completely sold on the idea of becoming a landlord, selling will ensure you don't suddenly find yourself with a larger bill the ATO.
Finally, there's also the emotional connection that you will undoubtedly have to your old home. After living in the property for a long time, there will be a huge amount of memories tied up in the house, which can make it difficult and stressful when tenants don't necessarily treat things the same way you would. For this reason, a lot of landlords find it easier to simply say goodbye to their old properties and start from scratch with a purchase that is purely a rental.
Regardless of which option you think suits you best, the Laing+Simmons team is here to help. Get in touch with us for more information on selling or renting out your old property.