Sell or Rent Out?

Hi Guys,

I’m fairly new to property investing and need some advice.

At the moment I own just 1 investment property which I am thinking of selling. Why am I thinking of selling, you ask? Well, when my husband and I borrowed against the IP (which we lived in for a year to get the $14,000 first home owner’s grant) to fund our PPOR we were stupid and borrowed most of the money against the IP rather than the new PPOR. Also, we funded our wedding and honeymoon through this property. This means that a lot of the money on the IP (approx 26%) is not tax deductible as it was used for non-investment purposes. Hence we are thinking of selling up and cashing in the profit (we have made about $85,000 in the 2 years we have owned it).

Problem is, that I believe since we have been renting it out for the past year, we would be up for a hefty capital gains bill. Since we haven’t claimed any of our tax deductions is this correct??? Also, due to refinancing the place a couple of times out of the $85,000 we would only end up with about $20,000 or so after costs so I don’t know if it’s really worth it.

On the other hand, if we were to keep renting it out, it’s almost +CF (would be if we hadn’t refinanced!), however we were told at our recent body corporate meeting that the complex will need to be painted in 6-7 years at an expense of approx. $250,000 so therefore our body corporate fees will be rising quite sharply in the near future.

I don’t know what to do. Please let me know your thoughts. Hope this all makes sense.

Thanks,
Luckyone