What is the wisest decision?

im no guru – im very very green.  but u did ask "what would you do?"!!!  so u brought this noob opinion onto yourself 

but if i were u i would be going with option 3.  because u owe nothing on that house, that is pure profit u are bringing in.  u arent having to pay interest on that house.  and itll just keep going up and up in value.  so just say u sell the house in 3 years instead, u would have an additional $62k (minus tax, PM fees etc) from rent charged, plus also the extra capital growth on the property.  I dont know about Melbourne real estate, but I assume that would have to be over $100k between the rent and CG for the three years?

id be using this money to help pay off the new mortgage in the country.

but i wouldnt be surprised if someone comes back and says that my opinion isnt the best option – as i said, im a noob who is just learning

Option 3 – Ask yourself where is PPOR exemption going to be on the country house or remain for 6 years on the city house.
If you move the PPOR to country house you need to get a valuation done on the City house as it is no longer PPOR and you need to establish cost base for future Capital Gains Tax event ie selling .

What names is your existing PPOR in?  If in joint names, lower income earner sell half share to higher income earner who borrows $200K, interest on this is tax deductible.  Lower income earner puts $200K down on new PPOR, and you borrow $130K tax deductible.

Or form a discretionary trust which buys existing PPOR and you guarantee the trust's borrowings using your new PPOR.  You will need to consider ongioing costs and other expenses such as land tax.

You have not considered CGT consequences on sale of investment unit.  But you could do the same therre by one buying the other out.

Personally I would invest in three or four and or more creative positive cashflow investments. Tripling the cash flow then buy a own home in the Country. And good choice going to the Country.

Basically my approach would be to draw out the least amount of equity in one property at a time borrowing and structuring with 20% deposit down on each investment. As a criteria i would set a min of 10% – 20% Cash on Cash Return for each one. Repeat process. Especially out Country town.

Would not sell existing holds only because they are not in mortgage dept and will be better off to catch the next rise (even though that is years off). Otherwise i would not be considering buy & hold for capital gains.

I would be positioning yourself with land that can be developed in the future as building with be the silence momentum that is the underlining driver of the next upswing when it upswings slowly. Perhaps it's a corner block with a large deep block or something that can be developed later on similar. In average to median priced reasonable streets.

Or take out an offset account on the first, then second etc. Seems you should have good cash-flows and be able to build them up higher from that position.

At the end of the day go with your gut feel and what seems right for you. No one can tell clearly from in a short forum and or no matter how proffesional they think they are. There are to many variables and only your close intimate knowledge of your circustances can tell and make the best desicion. Period!

It does not matter how high up on the pedastals they sit and talk crap they can not tell about individual situations.

Hi Mavoz, In your situation I have seen so many people’s accountants advise them quite differently in these scenarios – so if they don’t give you the answer you want, just ask somewhere else. A couple of years ago I dealt with a youngish couple who were moving back to Ballarat to raise their kids in 8-12 months time. They knew that they would lose one income when they moved, and the other one would be reduced by around 30%. So it was important for them to get the new property in Ballarat before they moved and had their income reduced. Their accountant told them to buy their new house in Ballarat as an investment initially and rent it out until they moved there in 10 months time. The purpose of the loan was to buy a new investment property, and he then claimed the interest on it was tax deductible. As their existing house in Melbourne was worth slightly more then the one in Ballarat, when they moved to Ballarat they transferred (ported) the debt on that to their old Melbourne property without having to provide any updated income details – like for like security. Again this is the advice that they were given, and it might not be applicable to your situation. Warm regards,Mike