Thanks heaps for your replies. Building seems to be the best way to go. Ialready have equity in the land and once the house is built and rented out it would nearly be paying for itself. The only thing holding me back is the time it will take to build the house as the building industry is booming here and it could take 18months. Also I’m not sure exactly what to build from a resale point of view and a bit hesitant about renting out a brand new house as it could get trashed.

The block is making a capital but as far I know I can’t claim the interest on the loan for the block as a tax deduction because there is no income from the block so I’ts probably best just to sell the block and buy something else instead of waiting round for 18 months for a house to be built.