Hold IP or sell for new PPOR + IP?

Hello property Gurus!

First time here, please be gentle!

Just come from accountants who advised to sell IP in Brisbane (worth approx 400k, 121k owing) to buy a PPOR (on the basis that rent money is dead money). IP was PPOR bought in 2004 no other props bought in between. IP is furnished and cash positive and self managed with great tenants on lease @ $300pwk. We claim tax deductions on furnishings and renovations. We currently rent in Canberra (310k) and have reduced joint employment income of approx 80K combined whilst we look after 2 toddlers.

Previously after some research we were planning to use equity in existing house to buy another IP to rent furnished room by room to increase returns/maximise deductions whilst renting for a few more years.

Does the accountant seem to have it right? Or not?

She also did not like the idea of personal trusts or setting using a business to buy IPs with.

Thanks for your insight, all most welcomed.

Hi laurieload2,

I'd ask the accountant how many investment properties she has or how many clients they have own substantial investment property portfolios.  I think you need to get a second opinion from someone that actually deals with people that invest in property.

If you are happy to continue to rent your IP to good tenants and can release equity in the property to continue investing, that is certainly a strategy worth more investigation.  Also, whilst you are comfortable renting whilst building up your investing portfolio, as long as the numbers stack up, why not continue to do this?  It comes down to what you are comfortable doing and what suits your lifestyle and investing goals.

You definitely need to seek the advice of another accountant as you need to correctly structure your purchases.  If you current accountant doesn't like trusts and companies, you definitely need additional unbiased advice so that you 1) understand what each entity does/doesn't do for you and 2) can make an informed choice for yourself as to how to structure any further purchases.

Good luck.

Wendy
http://www.realestatewomen.com.au

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