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Currently renting in Melb - buy IP or PPOR?

Discussion in 'General Property Chat' started by SoroSoro, 20th Jul, 2016.

  1. SoroSoro

    SoroSoro Member

    Joined:
    18th Jul, 2016
    Posts:
    18
    Location:
    Melbourne
    Looking to buy my first property and wondering if I should be looking to buy a PPOR or IP and continue to rent for the tax benefits.

    Does anyone have experience purchasing an IP first?
     
  2. D.T.

    D.T. Adelaide Property Manager Business Member

    Joined:
    13th Jun, 2015
    Posts:
    5,595
    Location:
    Adelaide, SA
    Do you like renting where you are?

    Investing first is a million times more beneficial from a financial and tax standpoint. You can start deducting interest and depreciation, you don't hog your borrowing capacity up in non investment assets, you start earning rent, etc.

    Sometimes life is more than about money though - there's also stability and certainty of where you are, the joy of being able to do whatever you like to your property, etc. so you need to weigh up more than just the investment returns.
     
  3. SoroSoro

    SoroSoro Member

    Joined:
    18th Jul, 2016
    Posts:
    18
    Location:
    Melbourne
    T
    Thanks DT

    I'm moving regardless in a few months. Happy to rent a little closer to the cbd and purchase somewhere close to the schools we like and move there in a few years when the kid is school age. By then I could likely buy an IP and make the first place my PPOR. Just feels a bit like renting is throwing away cash, but if the tax incentive is there, it seems worth it.
     
  4. The Y-man

    The Y-man Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    902
    Location:
    Melbourne
    Agree with DT - it also lets you potentially engineer a situation where you rent in a very desirable but ultra low yield suburb (ie low rent for the value of property) while simultaneously owning an IP in a suburb with good growth prospects as well as decent yield (which could be interstate).

    Just make sure you talk to someone who knows the financing and tax side because making an IP into a PPOR and vice versa can have all sorts of tax implications later if not structured correctly.

    The Y-man