Sorry guys for the confusion and thanks for the feedback. I believe SuperAndrew nailed it on the head.

Basically I’m asking the age old question PPOR 1st/ IP 2nd or IP 1st/ PPOR 2nd.

So my wife is nagging me to buy a house/unit because she loves to renovate/DIY etc (well she gets me to do most of it). We are currently renting and I have shares that are outperforming pretty much everything at the moment so I’m reluctant to sell any just to buy an overvalued property (we want to purchase inner 5km Brisbane). I’m keen to wait it out – rent, relax and wait for the housing market to cool down a little when rates rise next year.

Soo anyways IF she wins the argument and we end up buying, I’d prefer to use as little deposit (sell as few shares as I can) and possibly buy a unit as our PPOR for 2 years or so. Then after 2 years, we will upgrade to a house (PPOR) and turn the unit into our IP.

Are we better off renting for another 2 years then buying our house (PPOR) and drawing equity from that to fund the IP? (Setting up IO loans on both, offset on the PPOR , all incoming and outgoing funds into the offset and using credit card to pay for expenses) Ideally this is the way to go to maximise our tax deductions yeah!?

But If we were to purchase the unit first, how could I end up with the above scenario and restructure the loans to ensure we have maximum tax deductible debt?

Hope this makes more sense this time – I’m slowly starting to get my head around it all :)

Thanks so much loan ranger & superAndrew for getting back to me!

For your information we are 30 years old, live in QLD and earn a total of 160k pa (80/80) = DINKS. Our (my) year goal is to have a big enough passive income by age 45 to retire or semi-retire atleast. I know it’s ambitious but where there’s a will there’s a way right!?

Ok so i’ll do some more research into family Truts and their yearly fees etc…

Oh BTW we also have just over 1M in shares split 50/50 (yes we consider ourselves very lucky)

A few questions for you loan ranger (very wise ranger). If you don’t mind I’d really appreciative your feedback.

1. Is there anyway we could use property to reduce our CGT once we sell our shares? I suppose the only way to reduce the CGT is to drip feed them out slowly over a few FY’s?

2. So lets assume I pay cash 100% for PPOR of say 1M. I sell half the shares and use that 500k for IP’s and keep the remaining 500k in the market to collect divs etc. Would that be a wise strategy?

3. I had a little read up on NRAS (only 40,000 avail I believe) and TBH they seem like they may be difficult getting our hands on some. Forgetting NRAS – if we were to purchase standard rentals around the 400k mark as you suggest, what sort of figures would that present?

4. With all of the tax deductions, how would this all work out should we be able to retire @ 45 and have no income to offset the tax against?

Once again your calculations have blown my mind – thanks so much for your input.

BNS

• This reply was modified 10 years, 5 months ago by  bns.