Is that OK not to have PPOR?

[Olive]

Hubby and I have combined taxable income of $130k p.a. no children, just bought our 1st IP $300k and we are renting a small unit at the moment paying $400/wk. Hubby runs a small business earning $30k gross on top of our $130k income. We plan to have children in 3 years time and I plan to quit the full time job which will bring the taxable income down to hubby's $50k + business $30k (get paid dividends once a year). Not sure what to do next to grow the portfolio, there seems to have these options:

A. 1st IP $300k + 2nd IP $300k + keep renting $400/wk + if allows keep buying.

B. 1st IP $300k + next to buy PPOR $450k Syd unit + save up again for IPs + if allows keep buying (doubt if unit capital growth doubles every 10 years...?)

C. 1st IP $300k + next to buy PPOR $750k or stretch to $800k Syd house & land (we believe double every 10 years, but will need to lease half out to help mortgage repayment)

D. ??

Our accountant has advised us that if we have spare cash best to put it under PPOR. He explained that money in offset account for IP doesn't really work that well it only helps reducing interest which can be claimed back from our taxable income anyways. From his experience capital gain on PPOR earns more than IP due to CGT, Is that true?

And he recommends to use PPOR as 'savings account' rather than paying dead rent. We'd love to grow the portfolio and we are not sure how to grow the portfolio when PPOR isn't earning any rental income? We'd love to buy more but not just get stuck with the PPOR. If we go for option C, we probably won't be able to borrow more.. would option A be easier to roll the money ball?

We now have a deposit to buy something around $300k - $450k but not enough for a $800k...just don't know what to buy next?

Any suggestions? Many thanks.

 

[ryan_mel]

I would have the same opinion as your accountant's

all the best

ryan

 

[jaycee]

IF you uy a ppor, yes, chuck the offset against that property instead of the offset


If you dont buy a ppor, then use the money to reduce the interst on your loan.

Run some numbers for the scenrios if you uy ips with / withut buying a ppor and see what you think is better for you -

Ultimately it comes down to your personal wants as much as anything else

 

[Ausprop]

if rent is dead money then what is more than twice that in interest, rates, depreciation, insurance, maintenance etc? So dead it's a dinosaur??

 

[awesome wells]

Forget the figures, if you're having kids your hormones will tell you that you want to nest. Get a PPOR.

 

[Propertunity]

A. 1st IP $300k + 2nd IP $300k + keep renting $400/wk + if allows keep buying.

In 3 years time your income will drop to $80K + you will have the added expenses of kids and all that brings. Rents will continue to climb. IP#2 buy now and sell in 3 years may be a good idea if you can be guaranteed CG in the next 3 years. This is pure speculation - 10 years, yes OK, 3 years maybe/maybe not especially after transaction costs.

B. 1st IP $300k + next to buy PPOR $450k Syd unit + save up again for IPs + if allows keep buying (doubt if unit capital growth doubles every 10 years...?)

You do not want to have kids in a PPOR unit

C. 1st IP $300k + next to buy PPOR $750k or stretch to $800k Syd house & land (we believe double every 10 years, but will need to lease half out to help mortgage repayment)

I don't think you can afford the repayments on an $800K PPOR in 3 years when your income drops to $80K. Renting 1/2 the house out may not give you the privacy that you want.

D. ??

This one

We now have a deposit to buy something around $300k - $450k but not enough for a $800k...just don't know what to buy next?

I'd buy a $400K house and granny flat now and rent them both out. You stay renting where you are. Decide in 3 years time whether to make this your PPOR or something else. A lot can change in 3 years, but this dual income property will pay for itself and will not be a drain on your reduced income.

 

[Olive]

Sydney Perith, Emu plains, Granville.

Thank you all, houses in Syd around $300-400k we only know of Syd west e.g. Perith and around. Does anyone know about Emu Plains next to Perith? What about Granville?

 

[Propertunity]

Thank you all, houses in Syd around $300-400k we only know of Syd west e.g. Perith and around. Does anyone know about Emu Plains next to Perith? What about Granville?

Olive you don't have to go out as far as Penrith or Emu Plains to get a $400K house if you don't want to. Plenty of those within a 10km radius of Parramatta if you have a look.