Currently renting in Melb - buy IP or PPOR?

Discussion in 'Investment Strategy' started by SoroSoro, 20th Jul, 2016.

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  1. SoroSoro

    SoroSoro Well-Known Member

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    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?
     
    SoroSoro, 20th Jul, 2016
    #1
  2. D.T.

    D.T. Specialist Property Manager Business Member

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    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.
     
    D.T., 20th Jul, 2016
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  3. SoroSoro

    SoroSoro Well-Known Member

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    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.
     
    SoroSoro, 20th Jul, 2016
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  4. The Y-man

    The Y-man Moderator Staff Member

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    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
     
    The Y-man, 20th Jul, 2016
    #4