G’day anyone who reads this, an thank you for doing so,
just want some advice on wat to do. I’ve just bought my first IP using the equity from my PPOR, it is positively geared, but it brings me back upto 90% on LVR on both property’s.
My question is i was thinking of renting my PPOR as an investment as well, an just renting out house for myself, I’ve read an heard of investors doing this an it seems to make sense, but I can’t help thinking there’s something wrong with that, I hope this makes sense, an would really like some advise on the PROS an CONS cheers.There can certainly be a financial benefit in renting a property whilst renting your PPOR – so long as the rental is cheaper than the cost of living in the PPOR. Outside of the financial benefit there is the personal/emotional preference – some people like to own the four walls around them, whereas some don’t have any such attachment.
Just don’t go renting a whizz bang property for far more than the cost of your PPOR’s costs, as this is just setting you backwards.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Other than the financial benefits, another issue to keep in mind would be CGT.
If it is your PPOR then you are CGT exempt. However, if you rent it out then you will have to pay CGT when/if you do sell it.
Andrew
superAndrew | Property Analyser and Finder Tool
https://property-analyser.com.auOtherwise just make use of the 6 yr rule.
Other than the financial benefits, another issue to keep in mind would be CGT.
If it is your PPOR then you are CGT exempt. However, if you rent it out then you will have to pay CGT when/if you do sell it.
Andrew
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Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Just don’t go renting a whizz bang property for far more than the cost of your PPOR’s costs, as this is just setting you backwards.
Explained perfectly in that one sentence :)
And I do love the phrase “whizz bang” :)
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
You say this purchase brings both properties up to 90% LVR. But you should be attributing the loan for the deposit, presumably on the PPOR, to the investment property. Interest on this loan will be deductible against the IP. So the loan you can claim on the PPOR may be lower than expected. Also any increases of the PPOR loan, or any withdrawal won’t be deductible.
So work out exactly what expenses you could claim on the PPOR, including depreciation and work out the cashflow position. Then work out how much income tax this could save you each year. Then consider is this worth the hassle of moving out.
You could still probably claim the main residence CGT exemption on the PPOR for up to 6 years.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks everyone, ill do the maths an have a think about it, like you said Corey Batt the emotion of the property might take over.
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