Advice? Buying a PPOR vs Investment

Hello

My wife and I are weighing up what we should do and would appreciate any advice others may have.

We are renting in the Inner North of Canberra. We love the place and would really like to stay in the area. We're on a path of saving 30k to put down as a deposit on a property.

The thing is, Canberra is really expensive. We looked at an OTP 2br Townhouse for 600k yesterday. Needless to say, the mortgage payments could be tough and make it difficult to save to raise kids in the next few years, as well as having enough to go on family holidays etc.

A friend at work told me that we should consider buying an investment property in a town with more affordable property prices but with reasonable growth. This would allow us to enter the market but also let us continue renting in the area we love.

Do people have thoughts? We like the idea of continuing to rent for the time being. It's just a matter of whether it's viable or not I suppose.

Leigh

 

There are 2 tax strategies you might want to consider. Buy in the place you want to live in and then:

1. Move in for say 6 months and then out again. Using the 6 year rule you can rent the place out and claim all associated deductions yet still treat it as your main residence for up to 6 years and it can be CGT exempt.

or

2. Just rent the property out claim the deductions and then when you can afford it move it.. It will always be subject to CGT, but the effect will diminish over time and if you do sell eventually there may not be any tax payable.

see
Tax Tip 86: Don’t be so fearful of generating income from the main residence https://propertychat.com.au/communi...nerating-income-from-the-main-residence.6302/

Either way by renting the place out you can 'negative' gear and can afford something you may not usually think you can afford.

 

Just for consideration, the Canberra stamp duty concession is available till 31 Dec 8 June 2016 - 31 December 2016 - ACT Revenue Office

 

If I'm reading it correctly though, it will have to be under $455,000, otherwise every dollar after that you are paying 13.6% duty! That's an insane amount of tax.

 

You need to do what they call rentvesting. Rent where you want to live (if you can't afford to buy there) and invest somewhere else (where you can afford).

 

yeah, thats what we do

 

Okay great advice. Any tips on threads I should look at on where to invest? We simply can't afford to leverage ourselves with that much debt in the area we love and would much prefer to rent where we like to live at this point

 

Canberra is performing well from what I have read? I have not personally looked at this State.
If this is the case find out where and what is moving in your State/suburbs, is it houses/units etc. Are there areas which appear to be undervalued compared to surrounding suburbs?

Network with lots of agents and find out how long property is taking to sell in specific areas/suburbs, are they getting multiple offers, who is buying. Can you establish a pattern on realestate.com, easiest way to find out if an area is moving.

If you can identify areas/pockets where there is greater demand and not enough supply this is the easiest way to make money. This requires lots of phone calls and persistence