Planning & strategising an upcoming move

Hi forum,
LONG POST AHEAD:
But have a question that seems to be bothering me and looking at strategy/planning
for the upcoming move.

Facts first:
Present financial situation:
a. PPOR - FHOB buy price 470K bought in Feb 2021, now valued by bank at 610K last week.
This makes useable equity of $120K.
This was done by doing some work in the property and buying an undervalued property in a rising suburb in Darwin.
b. Home loan is Split loan into Fixed term 2 years - 214K & variable with offset account - $160k. Offset account is fully offsetting variable loan amount.
c. Besides money in the offset account, present cash in savings $100K+.
Have investments in international and Australian markets to the tune of 200K, not willing to touch.
d. No other debt besides the home loan.
e. Combined income of 225K p.a with an expected addition in the family in Feb 2022.
Generally, manage all our expenses with less than 4k p.m with some cash to spare.
Good savers and dont fall in the instant gratification trap that easily.

Recently signed a contract which would involve us moving interstate to Perth and will bring in alone income of 250K for self. Wife would be on maternity leave from Dec 2021---> Aug 2022 with a paid leave for 20-22 weeks and rest of the time would be unpaid leave.
She can work remotely for the later half of 2022 and then later on would find work in Perth, which by moderate estimation would bring in atleast 125K p.a + benefits.

Plan:

1. To buy a house interstate in Perth which would be good to meet our needs for the next 10 years. We are looking at 4Bed 2 Bath house in > 500 sqm block in a suburb with a good school. Would like to keep it within 600K however for the right value may stretch our budget till 650K as well.
Areas: Canning Vale, Wattle Grove, Other family-friendly suburbs south of the river (Still researching)

2. Planning to make a move in Dec 21 by earliest or around Feb/March 22 in this house with wife.
Given good cash flows and income history getting a loan should not be a problem as we are planning to buy in the next 3-4weeks time, rent it out till our plans get finalized and then move into this property.

3. Dont plan to sell our house in Darwin and would rent it out at present rent valuation of $450p.w.


Trying to understand what should be the best possible way to make this move so that :

i. Funding this future PPOR which would initially be an IP and then converted to a PPOR.
ii. Minimize future tax liability
iii. Don't exhaust our loan serviceability and future lending power
iv. Still gives us the ability to buy atleast 1 more investment property of around 520K before the end of the financial year 2022.
v. Should not restrict our cash flows and cause unnecessary sleep worries in case wife want to extend time off work or I look at changing jobs next year.


What would be your suggestions?

 

Make sure you record all of the ongoing costs of the home you move into. It is likely to have a CGT liability later on (albeit small) but the costs of ownership will reduce that.

Get a valuation of the Darwin house when you make it a rental. This will likely become the cost base of the house for tax purposes when you sell it later on.

There are a few issues with the main residence exemption but the ones mentioned are important.

The ownership of the Perth home will depend on the income profile of your investments - but it will only be a 6 month rental so it is not that significant from a tax perspective (it is still worth running the numbers).

 

Thanks for your inputs, much appreciated.
Next question is funding the new PPOR.. as I would be putting in 20% deposit for it.
Should that be coming out of equity of 120K or from the offset account.
If take out the equity then till the time new PPOR is an IP this will be tax deductible however, post that I am not sure what will happen.
It might be simpler to just use offset money to fund this and later on take out equity from Darwin PPOR which will then be an IP to fund future IP.

Little confused here..