advice on renting out primary residence and renting elsewhere

I own a biggish house which is now fully paid up. I intend to put it up for rent and rent a smaller place to live.

Will I be able to claim the rental I pay for the smaller house as tax deductions from the income I get for renting my own house? Is anyone able to advise on this?

You can't claim the cost of renting another house you live in off the original rental home income.

Is it in your interest to get a tax deduction. What is your marginal tax rate. Is it 30% if it is you could pay 30% tax on the first property income and use the 70% left over to help pay off another home loan for the next house you live in.

Or live in the bigger house and rent out the new smaller investment house loan and pay it off with the rent you are not paying or loan repayments you are not paying on the first house you have paid off..
(When you have a house paid off you can get an equity loan against it to cover the deposit for the second investment house. )
(or use first house and second house combined as security – more risky as you can lose both houses if you get behind)

Jlee,
         Yes.
Also land taxes, council rates, insurance, repairs, depreciation on assetts and building, etc just as per a normal rental property. I know of a few people that have done what you are trying to do. But most of them came out in front mainly because they had large loans and have moved back into their own house when loan repayments have decreased.

just a quick question on the CGT exemption… I bought in Oct 2005 and lived there as PPoR until Feb or Mar 2007. From then it became IP and I moved overseas… I'm back in Aus now but chose to rent and keep my place as IP.

Is the 6 year absence from the month the property ceases to be PPoR and becomes IP, or from purchase date? and if I want to keep it as legal PPoR for CGT exemption how long is the period required to reoccupy?