Ask Paul: I can pay off my investment property in full but should I?
By Paul Clitheroe Published on March 11, 2020
I bought my first home from my super last year and the tenant has been in the house for eight years.
I am claiming back on getting small projects done to the property, such as painting the external wall, etc.
I have ample funds to pay for the house outright but I took out a loan with Bendigo and Adelaide Bank for $46,000 just to get a good credit rating, to be honest.
I plan to retire next year and move back into the property, which I will finish, but should I pay it off outright now or keep making monthly payments until I am ready to retire?
That is a nice position to be in, Kaye.
I am not quite sure why you will need a good credit rating as you move into retirement, but it can't be bad to have one!
I don't know a lot about your tax situation, but it seems to me that continuing to make monthly payments while the property is rented is a good plan.
Maintenance on the property should continue to be tax deductible while the property is rented, providing of course the work done is not an improvement.
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One response to “Ask Paul: I can pay off my investment property in full but should I?”
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Hi,
I was under the impression that you couldn't claim deductions for things like painting for the first 3 years on an investment property. Well that's what the ATO told me when I incorrectly claimed. They are of the opinion that the purchaser would have been aware of any requirements and the purchase price would have been adjusted accordingly to compensate.