No. Interest can only be deducted from your income. Only capital losses can offset capital gains.

Cheers
Paul

This seems to be the assumption inherent in the 'positive CF' strategy too. Cash flow is definitely important but capital position (i.e, your wealth) is the bottom line for me.

Paul

How old are you..? Please don't say you are 'Gen Y'

In my opinion, it is too late to go fixed now, especially if you are comfortable with higher repayments. If I were in your position, I would just stay with variable. 

There's lots of cheap property in rural Qld….it's cos SFA of the popuation live there. It's probably more important to add at least one more variable to the list so that you get a list of "affordable properties you will actually be able to re-sell".

when you say….
If I capitalise the interest of the IP into the LOC (and other expenses) for the first 12 months the LOC will grow to around $45k.  By capitalising the interest I put 100% of the rent onto my PPOR mortgage  which with our extra repayments already should bring out PPOR mortgage to a payout date of this time(ish) next year)…

Do you mean that you will be paying aprox. $100K in extra repayments in the next 12 months, i.e., around $2K per week?
And is there an existing lease paying $650 per week, or is this just what you hope to get based on research etc?
sorry, i'm just trying to get my head around the numbers.

Cheers
Paul

Hi Richard,

Any chance of getting  report for 36 Fleetwood St, Macgregor, QLD 4109. Only if you have time mate.
My email is [email protected]

Cheers
Paul

thanks Richard, I appreciate it.
 
Cheers
Paul

when we replaced our dishwasher, the service  guy (who wasn't affiliated with nay company in particular), said any decent brand if good, just not Fisher & Paykal – he said this brands keep him in business, when it comes to repairing white goods. 

Hi Andy,

Congratulations on saving $100K – it's a great achievement  & you have obviously worked very hard for it.

You've asked for advice specifically on property so please forgive me from coming at your question from a different angle. I don't know all your goals & your attitude to risk (i.e., conservative vs aggressive), however my advice would be to talk with an experienced financial planner & get some ideas on property investing & on other asset classes as well. This would help you to understand the benefits & risks of each asset class before you invest, so you could see which suits your goals best.

For example, even just considering two major asset classes (property & shares), generally speaking:
 – direct (residential) property has less volatility than shares,
– there is a sense of comfort that comes with bricks & mortar & being able to see & touch your investment 
– property can produce a stable rental income
– negative gearing on property can be used to improve your tax liabilities
– property has high entry & exit costs
– property has maintenance costs
– property is illiquid – not uncommon for average settlement to be 30 days.
– whereas shares have low entry & exit costs, no maintenance costs, very liquid (get your money in 3 days), negative gearing strategies can minimise tax, plus only shares have the advantage of imputation credits, which effectively will mean that you need a lower rate of return to break even on your investment. However, shares are generally more volatile than direct (residential) property.

Of course, if you are comfortable with only investing in property then this is an important part fo the equation as well (it's just that it may limit your options for wealth creation & tax minimisation). But a financial planner would be able to suggest a balance of asset classes that would best meet your goals. There are also cost free options to get this knowledge like this forum or for shares there are free classes on the ASX website.

Also, re: negative gearing – you mentioned spending mid-$200K. If you looked at an example where you had a $200K investment, where you borrow the whole $200K as an example & were paying the same interest rate on each loan, it might look something like this:

Property:
Cost: $200K
Loan: $200K
Int rate: 9.5% (use whatever rate you like)
Income: $13,000p.a. (rent)
Other expenses: $3K

Shares:
Cost: $200K
Loan: $200K
Int rate: 9.5% (use whatever rate you lke)
Income: $10,000p.a. (fully franked)
Other expenses: $0

On property, you would need 2.3%p.a. to break even; with the shares you would only need 1.2%p.a. So you get less income from the shares but this is outweighed by fully franked dividends & the attached imputation credits.

I can give you more detailed workings on the above example if it doesn't make sense. But I guess my point is just about understanding your goals, your attitude to risk, and the benefits & risks of each asset class & how each asset class can help you achieve your goals.

Best of luck with whicever way you decide to go & congratulations again building up your $100K.    

Kind regards,
Paul.