Sell PPOR or convert to IP

Just after different peoples opinions on what i should do.

currently living in PPOR and starting to build a new PPOR
should i sell or convert to IP?

have probably over capitalized slightly as i wasnt intending to build a PPOR so soon. and plans changed, so has put my structure out slightly.

very solid house, have replaced mains water pipe to house,option or rain water or mains water to house by switch of a tap, put shed on, has solar panels, fenced side yard (corner block) the list goes on. apart from HWS (over 10 years old) i cant see any maintenance issue in the next few years that might arise

have tidied it up a bit after valuation. doing bathroom reno atm and look at tidying kitchen up.

i could rent it out for about $250/week. loan is only 136k valued at 200k in the slow market (i think its undervalued though by around 10k min bore my additional work) . id be wanting around 250k but thats probably more than its worth.
also would have to pay CGT on the gains

if i could sell for a decent price i probably would but market isnt too active atm
if i cant, could i sell to de facto partner or some other way of extracting the equity out to put against my new house without costing too much? (depending on financials)

as my setup wasn't correct when i started and have a fair bit of equity in the house. If rented i wouldn't receive max deductions and money would be tied up in the 'IP' that i could use to offset the new PPOR
only useful to buy future IP's

If i sold i could release that equity and use it for new PPOR and (increase other investment opportunities ?) but also may be losing out ie selling costs, lack of rent, less CG than im after)

hows the CGT ruling work if your trying to sell your previous PPOR while living in your new PPOR. and can you rent it out while trying to sell it and not have an issue in that regards?
 
Hi Bman

Dont know your circumstances but think that you can do better with further leverage. The original PPOR yield is not bad at 6.5% but given the value of the property, not somewhere you'd achieve significant growth (compounding).

There won't be any tax payable on it. What if you could take out 150k after selling costs and purchased 300k x 2 IPs at 80% LVR in a higher capital growth and better return area? Or at least same rental yield but better growth prospects? 600k leveraged versus 136k is much better use of your funds...

May be worth speaking with a broker.

Thoughts?
 
Thanks MsAli,

without giving you all the details it is probably hard to get the best decision.

i do agree if i sold i could leverage further, im wondering if i could hold that cashflow + property and leverage into another property with the equity.
but then i wouldnt have the funds against my PPOR.

im thinking the market is a little slow to make a decent gain by selling and might be better to hold at this point in time. if the market was good id sell. but with the extra things i have done (myself to save money) i probably wouldnt even recoup the actual cost at this point in time due to a slow market.

i will try and put it up for sale and see if i can get a bite but if i cant, im not sure what to do.
 
Would it be worth selling & paying down the new PPOR, revaluing the new PPOR and then using the funds to buy IPs.

Seek tax advice and find a good broker on here.
 
hows the CGT ruling work if your trying to sell your previous PPOR while living in your new PPOR. and can you rent it out while trying to sell it and not have an issue in that regards?

If you sell within 6 months of acquiring the new one you may count both as the main residences - with some conditions. s118-140 from memory.
 
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