PPOR upgrade situation

Dear Property experts,

My friend is in an interesting situation.

He has two properties
1) PPOR - Property in Scofields - current value 1.1mil, loan pending 500K , land 250m2 - can be rented at 750/week
2) Investment - Property in Ponds - current value 1.9mil loan pending 1.5mil , land 500m2 - renting at 1000/week
Property is in couples name and they earn around 300k

which below options would lead to maximum wealth after 10 years
1) Rent property 1 and move into property 2
2) Stay at property 1 and continue to make property 2 investment

 

I'd think that your friend should transfer the ppor loan into the IP loan for starters, so pay off the ppor. As for which is to be the ppor, i guess 2 factors are which has the best prospects of growth, but if it's the IP then I'm not sure of the calculations regarding CGT. My understanding is you can elect to have one ppor at any one time, and they'd get a valuation from the date of it becoming income producing, but this is best answered by someone else. 250m2 seems extraordinarily small for 45km from the cbd, unless it's a townhouse or duplex, so maybe that has the least growth prospects, which complicates things a bit.

 

There's always more to the story
People I know moved two suburbs over to save a few dollars each week, but then traveled further each day for school drop off/Pick up and work, ended up $50 a week worse off
They could rent out both and go work regionally or in the mines
There's too many options here based on not enough info

 

The school would be near to the second property. Work distance is almost same from both the suburbs
The main challenge now is, will the negative gearing short term benefits is better than the long term benefits of capital growth ...

 

Unknown but some thoughts:

Potentially move to property 2 and establish as main residence for 12 months.
Then move back to property 1.

Reason - enables both to ‘potentially’ be claimed as 6 year absence rule for CGT exemption if one grows grows faster than the other. Only need to decide when one is sold.

Property 2 has higher loan, likely better for tax to rent out. But unknown other factors - is loan all related to IP? Holding costs?

Which do they prefer to live in?

Are they using offsets?

Many possible options and ideas but just a couple of thoughts to consider above.

 

This sounds a good option.
Only con i see is moving costs
Property has bigger loan and everything is related to ip