Two town houses (Owner occupied and IP) or a large house (Owner occupied)

[cocka2]

Hi all,

I've got around 120k in cash in a high interest saving account.

I am thinking of buying a property as I am renting currently. I appreciate your opinion whether it makes sense to buy one house for like 550k by depositing %20 (to avoid LMI) or should I consider buying two smaller properties, like each for 350K, with 10% deposit and have one of them as IP (interest only loan). Which one is financially more beneficial in short term (e.g., 3-5 year) and long term (10+ year). I would like to know your opinion on how to correctly invest in properties.

I don't know if it matters or not, I am living in ACT.

Cheers,

 

[Rolf Latham]

Hi Cocka

Much comes down to your personal and lender deemed serviceability.

In any case, if you were to do the 2 props thing, make sure your finance is structured so that you maximise the tax benefit.

On the surface that may be doing an 80 % lend for your PPOR purchase, and then doing a 90 %equity pull/ split as a separate transaction secured only to the PPOR.

Doing so will minimise the non dedbt, but will alsomake your LMI premium, fully deductible over 5years since the intent of the LMI premium is to buy an IP.

Pls seek specific tax advice

ta
rolf