I was arguing with a few friends on whether in my situation it would be cheaper to rent or to move into my IP. I thought its cheaper to move in, they thought renting is better. This shouldn't be hard to calc and they all say I'm wrong. We were drunk but still. Can ppl take a look and confirm if I'm going mad ? The IP right now is just breaking even (incl tax deductions etc) Rent - say 450 per week. That's 23,400 a year (strata, council etc covered) Move into IP. Pay off mortgage of 550K with 330K offset. Balance of 200K. Conservative 4% interest is 8,000 a year. Add council rates - about 2,000 Strata about 4,500 Lets say another conservative 5,000 for other expenses, tax deductible on interest missed out etc Altogether add up round up to say 20,000 a year Isn't moving in still cheaper ? And that's before considering debt recycling with pulling out equity paid off for investing etc Friends keep saying that expense of 450, but forgoing rental income of 630 per week is an obvious loss
What is that $330k doing otherwise? It sounds like it's not attached to the IP at the moment if the property is just breaking even?
^its just sitting in the offset account at the moment against this loan, its not attached to this IP. I had a majority of it in shares about a year ago - sold it then (lucky) with idea to use it to reduce this property's loan balance when it becomes non-deductible once I moved in just to be clear, just breaking even is without the 330K The IP lease is coming up for renewal in a few months, so need to make a decision I thought I had thought it out, but having doubts I"m missing something
Its simple really what is: the cash flow living in the property and renting it out with you paying rent?
Where are you living now? Do you own other properties? Are you currently enjoying the CGT benefits of a PPOR? If not in a PPOR or otherwise claiming absence from one, moving in to your IP and establishing it as your PPOR will also have CGT benefits.
If you are renting elsewhere and paying $450 per week and the investment property is rented out and is neutral then the cost of doing that is $450 per week. If you moved into the investment property you how much would it cost you to live there - you have to consider rates, insurances, strata etc plus interest on the loan. Sounds like it might cost you a bit, but would it be more than $450pw?
Can you put a price on knowing that you won't be asked to move on at the end of the lease, able to bang nails into the walls with impunity, paint walls in strange colours ... . Not everything can be measured in $s and cents but these things need to carry some weight in your decision making.
I'm currently living with my sister, at her place. I pay board and share expenses but idea is to move out. agreed with the value of owning your own space. One thing is this place is a bit further from work (40min, traffic) and renting can be somewhere closer. Though post-COVID who knows how wfh shift can change how important this is. thanks for the comments
