All Topics / General Property / Advice on PPOR or + IP

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  • Profile photo of roborobo
    Member
    @robo
    Join Date: 2003
    Post Count: 155
    December 7, 2003 - 2:59 am

    I have 2 houses on 1 block of land, 1st house mortgage is 115k is rented for 225 p/w. 2nd house we live in mortgage is 180k would rent for 350 p/w. My question is? Should we rent out 2nd house and have 2 + IP houses and borrow 450k to buy another PPOR and use + cash to pay it down, or stay in 2nd house and look for other +IP houses.
    Paying mortgage on a new PPOR would’nt be a problem.
    Any advice would be appreciated.
    thanks
    robo

    Profile photo of melbearmelbear
    Member
    @melbear
    Join Date: 2003
    Post Count: 2,429
    December 8, 2003 - 7:51 am

    robo

    It depends on whether or not you are happy in your house, or desperately want a different one to live in.

    I would stay as you are (if you are happy) and concentrate on buying IPs.

    If you do think you will move in the future and rent out your current house, I would suggest you only pay the minimum off your loan, but put all money into an offset account. This way, should you move, you can then take that extra money to use in the purchase of your new PPOR, and the other debt becomes tax deductible.

    Cheers
    Mel

    Profile photo of MonkeyMagicMonkeyMagic
    Member
    @monkeymagic
    Join Date: 2003
    Post Count: 90
    December 8, 2003 - 10:21 am

    Hi robo and mel,

    I’m not sure whether moving from your current ppor to another ppor would make the ppor #1 loan a tax deductible loan even if you did rent it out. I believe that it has to do with the intent of the loan.

    Best to check with an accountant but I heard that this was so.

    Josh

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    December 8, 2003 - 1:02 pm

    Monkey Magic, I beleive the loan interest would be deductible if they moved out of their PPOR and rented it out as the purpose of the loan would then be for investment purposes.

    But I agree with Mel that this is a personal decision and it is very hard to asnwer such a question without knowing your circumstances etc. (From a purely economic point of view, it would be adviseable to live in a caravan park and make all properties investments-but this may be a bit dramatic!). It is best to keep you PPOR debt as low as possible, so borrowing more to buy a new PPOR is not a good idea – from a taxation viewpoint.

    Terryw
    Discover Home Loans
    North Sydney
    [email protected]

    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

Viewing 4 posts - 1 through 4 (of 4 total)

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