WA Rent or Sell?

Hi guys, Noob here needs some guidance.

This is in Perth.

I built this house i live in 6 years ago for approximately 425k and if I sell it now I think I could get 500k.

I don't see the property value going anymore up in my suburb right now and only by another 100-150k maybe in 5-10years.

I have to relocate so I have to either sell this or rent it out.

I will be building another house soon closer to where I work now and the loans are all sorted already and plans in place.

I will be relocating during the time taken to build, (say one year) and renting.

I could get $500 per month as rent. (Which is a decent yield)

I will have to pay around $500 as rent when I rent, so this pretty much balances out. (Minus agent fees and other expenses from what I receive).

My current loan that can be negatively geared is only at 246k @3.1% interest only. (But this is fully offset, so I'm not paying anything currently)

To build the new house I had taken 110k against the equity, which I guess will be paid off if I sell.

Can someone with more brain cells than me work out the CGT bit of I decide to rent this out and sell in say 10 years? Assuming a sell price of 650k.

Would it be much more sensible to sell this and use the money to invest in something else (offset, EFT, another property with a better growth rate suburb) etc, or is it better to get the rent out?

How concerned should I be about capital gains tax?

Any thoughts or suggests are much appreciated and thanks for reading all the way through.

Graci

 

You need to discuss this with an accountant that understands property. I’m guessing you mean $500/wk rent? Will you have a mortgage on your new property?

 

Suburb??

 

Hence anyone buying should look at structuring their finances should a PPOR in the future turn it into an IP.

In a nutshell, owning one property (usually a PPOR) means when you sell/buy you are playing within the same market, if you own several properties as they all increase in value so does your income and options.

If you can afford to build and retain the current property as an IP this is your best option (having it professionally valued prior to leasing, and a depreciation report done).

If you can't afford both then sell, save up and build equity toward buying an IP

 

Unless it's a dud property or suburb (eg greenfield land estate etc), you should generally keep it for the long term if you can afford it. The transaction costs of selling and then buying another IP later are significant and you avoid this by converting this existing property to an IP. Given that this is a property investment forum I am of course assuming that you want to invest in property.

 

As long as property not a complete dud, property is a forgiving asset especially over long term. I prefer refinancing rather than selling to access funds.
Which suburb is your property?
And of you were to buy another property where and what would you buy?