What to do with IP
Hey all, would appreciate some thoughts and advice on what you would do in my situation.
I’m 46M, earning around $200k gross p.a. My partner earns around $85k gross. No kids.
We own an IP house on the Sunshine Coast, QLD, which we bought in 2021 for $1M. It’s currently rented for $950/week and is due to increase to $1,050/week shortly.
When we first bought it, the property was positively geared, but with the increase in interest rates it is now negatively geared. It’s also becoming increasingly frustrating/painful from a maintenance perspective.
The original plan was to eventually move to the Sunshine Coast, but we’re now not sure that’s going to happen.
We currently live in Sydney and own PPOR apartment, which I’d estimate is worth around $1.4M. The mortgage is approximately $840k, with $60k currently sitting in redraw.
The IP would probably be worth around $1.5M today. Current loan on it is 970K. I’m considering selling the IP in the new year. After allowing for selling costs and CGT, I’d use the proceeds to substantially pay down the PPOR mortgage, then redirect future cash flow into ETFs.
The IP will be grandfathered under the proposed negative gearing changes, so it would not be affected by those changes.
The alternative is to hold onto the IP for a few more years and hope for further capital growth, while continuing to receive the rental income and benefit from negative gearing.
What would you do in this situation?
Would you:
- Sell the IP, pay down the non-deductible PPOR mortgage and invest the surplus in ETFs? Or
- Hold the IP for the longer-term capital growth?
Interested in hearing arguments for both sides, particularly from people who have been in a similar position.
Thanks!