Hi All, I was wondering if anyone has changed their PPOR into an IP and what were your reasons for doing so? We have been in our family home for almost 4 years and we are looking at going interstate for a while. We are currently located in Flagstaff Hill (SA) I was considering selling it, but thought it might be better off if we kept it as an IP. It was purchased for $365k (2013), we spent about $35k renovating and the market value is about $450k (which is conservative). If you add renovation costs to the purchase price and take stamp duty and CGT into consideration, its probably not worth selling? On the other hand, I am also happy to keep it as an IP as it also gives us the option of coming back to our family home if we decide too. In terms of the “numbers”, the outstanding mortgage is about $320k (4.7%), weekly rental (provided by rental agent in the area) is $450-500 pw. Our rates are about $1200pa. I am currently a salaried employee, so there could be tax benefits if the property was slightly negative. Based on the above, would it be favourable to keep as an IP over selling? Look forward to hearing your thoughts. Cheers, Robbie
Yep - happens all the time. Most common reasons are upgrading and/or relocating. I've personally done it three times. Each time I've moved on I've turned the property into an IP. Cheers Jamie
Hey Robbie. I am in the same boat as you. I am toying with selling our PP and renting it like you are considering. We live in Brisbane and in a nice location and having a house built. Where as I am keen to move to the new build I am not keen to sell up our current. I believe that should you return to the first house within 6 years you avoid CGT on it. Of course if you have bought another then you will have to decide which becomes the property subject to the CGT. One has to unless you of course never sell..... Best of luck
Yeah, no worries there. It gets tricky for people who have paid off their homes (or a lot of it) and want to leverage up into a new really expensive home and the result is loads of non deductible debt. If you plan to rent or still have a high debt on the property and can afford your next place then no probs.
I lived in my home when I met my now wife. Anna was quite adamant that I would move to her house when we started dating - but initially I kept the old house as insurance in case she figured me out and gave me the boot. Well we are married but I still have the old house. I like the rental income now. Yes the value has fallen but I am still up from purchase. Yes the rental income is down about 15% from its high but I am happy. And I still tell her that I have somewhere to go if she boots me out.
