Hi all, My wife and I have just signed an engagement agreement with an architect\builder and we're about to embark on our first development(Two townhouses - Eastern suburbs Melbourne). We plan on moving from our PPOR and living in one of the new townhouses and renting the other. We own our current PPOR outright worth $1.5M, which we may return to one day. We also own 3 other IP's(All in Melb) totalling $3M. We have $500K cash in the bank offsetting $1.1M we owe on our IP's. All properties, including PPOR are jointly owned(I know it's not the best setup as we pay way too much Land Tax!). I am looking for some advise as to how to tackle my finances? My thinking is to use my cash in bank($500K) to pay for the townhouse we are going to live in and get an investment loan for the other lower quality townhouse($450K) of which we will setup as part Interest Only(I am aware of recent changes here). This way, I won't have to pay interest on my new townhouse home loan which won't be tax deductible. Only downside to this is the $500K cash will be all used up preventing me from investing it elsewhere. The other townhouse($450K)will be negatively geared. No big purchases on the agenda ATM and my wife and I are on pretty good incomes so can save quickly. Although we can spend quickly too - those damn holidays! PS. I have no intention on selling anything ATM, even though it is tempting to sell PPOR as I would be exempt from Capital Gains Tax on this sale. But there is no need, so I have no reason to. And we will also move into new townhouse, as we need the room as kids are growing up. Am I on the right track? Your recommendations and advise would be very welcome! Thank you.