renting and never having a PPOR??

Hi shanematt,

We are looking into this right now. You really need to crunch the numbers on both scenarios and for the amount of time you will be looking at. I did the numbers on our situation and renting has come out in front for us even though our rent is expensive. Our situation is – 2-5 year time frame then moving away, area we are in is currently at peak of market and so I'm not expecting much in the way of capital growth. The critical factors against buying in this situation is stamp duty and agent's fees on the sale which are not tax deductible for your PPOR.
If you have time on your hands then Terry's suggestion is a good one – move in for 6 months when you buy it then you have 6 years where you can rent it out and still claim your PPOR cap gains exemption.
Hope this helps
Lisa

Hi all, I'm learning here as well, can we still have the tax benefit with this method ? Thanks.

The way I see it, if you have IP that are Positive gearing they pay for your rent. Than your landlord pays for the maintence for the property.

Where if I had purchased a PPOR to live in myself, I would not be able to claim maintence of the property, interest, depreciation etc, I also lose an opportuntiy to purchase another postive gearing IP as I would have some equity tied up in my PPOR instead. It would also increase my commitment levels and reduce my income, reducing my borrowing powers. This is the main reason why I rent!!!

I also consider it a bad debt. As there is no income generating from the property and you maintain the property without able to claim anything back on your taxes.

The only advantage in buying PPOR is u do not have to pay Capital gains tax when you and if you sell. But I intend to never sell any of my IP. So there is no advantages for me in my situation.

one thing too: As humans we tend to spend money needlessly on our PPOR and by renting we are not tempted to spend money on that extra garden or super-dooper kitchen (that we really dont need)

so i have stuck to renting whilst having IP's in the background building wealth.

i like it purely as a good discipline. 

I’m renting and have 7 IP. It’s works well for me .

The area I live in has liked 3% return, but it’s a very good place to live! I’m do not like the idea of having well over 500,000 in non-deductable loan if I buy in my area. The dent in my cash flow will mean I’ll have to cut on my development projects.

The places I’m buying are at least 7% return and I do renovations, subdivisions and development to increase return and build an equity.

My very cash-flow wise future plan is:

1. Keep renting and actively investing for cash flow and profit in next few years.
2. Keep money on offset accounts until I have enough to buy a PPOR for cash.
3. Buy PPOR for cash.
4. Then draw an equity from home loan and use for further IP. This way all loans will be tax deductible.

Good point Terryw!

I have been thinking about this also.The PPOR i am in at the moment is nice but it is not where i want to stay. My plan is to hopefully upgrade in 2 years when/if my contract at work gets extended by ten years. But do i decide to rent and invest the equity i currently have ??? Who knows.I just settled on my second IP and now i am pricing building a new property on the back of the block.The numbers stack up but if i end up borrowing to my limit i may find it harder to borrow the extra cash to upgrade my PPOR down the track.Im at the point now where i will have to make a decesion on which direction as all my choices will now effect things.