Should I rent or live in a PPoR

Viewing 7 posts - 1 through 7 (of 7 total)

natashawicks
Member
@natashawicks
Join Date: 2011
Post Count: 7
March 7, 2012 - 4:56 am
I am currently renting with a housemate and pay $190pw. I don't know whether to keep renting and buy an investment property or to buy my own home with the idea to possibly add value (Please note I would be going halves with my partner in whichever house we choose to buy). I'm really struggling with the pros and cons. I want to own because I don't want to pay rent but at the same time I won't get interest tax deduction if I own. I could also sell later on if I wanted to if it is PPoR without CG tax, and its also nice to be able to own rather than rent (even though I know emotion shouldn't be a factor). The list goes on….
Any help would be greatly appreciated!
Catalyst
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@catalyst
Join Date: 2008
Post Count: 1,404
March 7, 2012 - 5:34 am
There are a lot of factors to take into account.
for example where you live. If you want to live in an area that has a low yield you are better off renting and buying an investment property in an area with a high yield.
Eg house to live in may be $500K to buy. Rent may be $500pw. You could buy that house and save $500pw
But if you bought 2 IP's (at $250K each) you would bet $700pw rent from them. So you are ahead $200pw.
Rough figures but you get my drift.
charlesbrown
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@charlesbrown
Join Date: 2012
Post Count: 1
March 7, 2012 - 1:00 pm
Catalyst has very aptly described you the right choice. In my opinion, it is always better to buy a propoerty as it would add value to fetch you some more AUD when selling. But to go on with this decision, you have to first decide what ROI you'll get out of that property. Don't make rush decisions and think of each and every perspective.
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Terryw
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@terryw
Join Date: 2001
Post Count: 16,213
March 7, 2012 - 9:38 pm
What about doing both?
Buy PPOR, move in. move out and rent it while you rent elsewhere with flatmates.
You can have the property CGT free for up to 6 years and continue to claim all the usual tax deductions.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email Me
Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
natashawicks
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@natashawicks
Join Date: 2011
Post Count: 7
March 8, 2012 - 2:21 am
We definitely won’t be looking to buy our dream home so we’re happy to buy a good’ investment’ property but live in it.we’re thinking at this stage to maybe buy an apartment close to the city(perth) that needs renovating.but to be honest I haven’t done too much research at all yet.but the plan is to think emotion free..the plan at least!
Terryw: do you need to live in it for a year to get that 6 years CGT free?
Terryw
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@terryw
Join Date: 2001
Post Count: 16,213
March 8, 2012 - 2:24 am
natashawicks wrote:
Terryw: do you need to live in it for a year to get that 6 years CGT free?
No. The property just has to be your main residence and then you move out. The rule relates to being absent from your main residence.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email Me
Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
mattsta
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@mattsta
Join Date: 2011
Post Count: 604
March 11, 2012 - 2:46 pm
I think the best choice would be the one that helps to achieve your goals faster. Is it to increase your assets or your monthly income? Always think about what are your major outcomes, and then decide from there. I think this will help to decide for you.
Oh, and if you want to do comparisons of rents, then you should do research of rental prices, which in many cases has been increasing lately.