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Hi wylie, I'm happy to give a (mostly) uneducated opinion. Yes OK I think you are getting confused. What if he never sells either property? He'll need to nominate the PPOR turned IP, as an IP, to claim the mortgage interest on it as a tax deduction against the rental income received on it...

Except for the "6 month overlap" rule, where you are selling one PPOR which isn't sold yet, but you have already moved into your new PPOR.