correct.

You pay interest on the difference between the amount owing on the loan and the amount in the offset account.
The reason people have an offset account instead of just paying down the loan is that the money is yours to take out whenever you like.

If you decide to make the PPOR into an IP you maintain the tax benefits of the whole loan.

Hope that helps. It can get a bit confusing.

UMMM. NO!!!

You are not an owner builder. You are an investor. If that was the case no-one would pay CGT on investment properties. We could just say we are owner builders and sell one every 3 years.
I like your optimism though.

And yes. Add any money spent on reno's to your cost base.

No. Not deductible (well until you sell that is)

 It gets added to the base when you sell.

The only things that are deductible are costs against the rent.

 In other words things you must pay in order for the property to be available for rent (interest, rates etc). BA fee is a cost associated with buying.

Check strata fees and report carefully. As you said there may be some costly work needed.
In Sydney (not sure what city you are talking about) there are some very old buildings that I know need (and have had) extensive work done. Can be in the $100K's.

Seems you are a bit confused.

If you borrow $50K at 10% the interest per year would cost you 5K.

If you had $35K in the offset account you would only pay $1500 interest.
You don't GET money on the money in the offset account, it just saves you interest you owe. But yes it is better having it there are saving 10% than having it in an account and getting (say) 6% THEN paying tax on that. 

If you have the means to repay the loan the amount you have in the bank is not detrimental. Depends on the purpose of the loan also.

What part of Sydney are you from?

I'd recommend attending some meetings with like minded investors.  I think you need to get your head around investing first and decide what direction you want to take. Jumping in and getting a buyers agent before you have any basic info doesn't make sense to me. But then I'm not selling anything.

There are a few in Sydney. Some have social meetups too which are good.

Well done Goldie. Good price and rent for that area. I don't mind Hebersham (well parts of it).

Prices have certainly moved around that area in the last 6 months.

Did you need to do any work to it?

You need to look at your figures more closely (or are you working on an 80% loan?).

A house at $160K will be cf- with a rent of $200.

I count ALL the costs of purchasing. Even if you pay the 20% deposit + the stamp duty + the solicitors fees out of your posket that money could be earning you money elsewhere so it still costs you.

Don't forget to add the costs of rates, insurance and property manager fees.

Hi, didn't have time to read all the above post but I did a bit of searching earlier.

As Duckster said- I hope you claimed half the electricity, rates etc in the year you added the rent to your income. If not shoot your accountant.

When you sell you can add your costs for the entire time you owned the home to your cost base (even after he moves out). This will in effect reduce your (paper) capital gain. So keep ALL receipts until you sell (rates, improvements etc).

See a good accountant NOW so as to minimise your losses.

Question?  Why are the rents so low?   3.8%.

Lucky you have paid down your loans otherwise that's seriously cash flow negative.

Why are you waiting to buy another? You only have 50% LVR.
Put the rents up and buy again.