u/smilelizy

36/35 couple with upcoming first child.

We’ve been looking to get an IP for a while, with the intention of moving in to become forever PPOR after X years(say 3) before school.
And NG for 3 years in the mean time.

Income: 260-280k/y + 90k/y

PPOR value: 859k
loan 426k, offset 441k.
ETF+shares ~ 80k (won’t touch)

It was the right long term strategy in our head, but didn’t find what we want at our budget for ages, combined with fear with taking on new large debt.

But with the price seemingly coming down a bit to our original range. We pulled the trigger to buy despite missing the budget 🚢!

Now we are going to be sitting on a massive loan of 😰
IP loan: 1.495m (purchase price)
PPOR loan: 370k, offset 293k

Now can’t stop thinking have we made a foolish decision. Should we have waited longer
Would price crash significantly further given everyone’s borrow power will be slashed if you buy IP (already banks are doing it)

(I’ve run a lot of numbers on affordability etc. but still feeling a bit on the edge)
If things gone dog shit, we can sell current PPOR then it would become a more manageable debt right?

Someone tell me it should workout in the long term please.

We currently live in an owner occupied place.
Was gonna buy a bigger house as IP and rent it out for 3 years for NG and move in as primary residence after 3 years. But wasn’t able to find a suitable one before budget night.

So want to understand what’s the impact if I continue my search and plan and buy an IP in the next 1-2 months say, and rent it out (say still 3 years till 2029) and moved in, assume I live there for a further 12 years make the total ownership 15 years (3 years rented)
What’s the tax implications of this.

Understanding NG:
Between now and 2027 Jul 1, I can still NG against salary and wages.
2027 Jul to 2029 I can only only carry forward the rental losses and apply against future property income.

CGT:
Assume I got the house for 1.3m and sold it for 2m after 15 years. (3 years rented)
Under the old rule, it would have been 700k*0.2 =140 K for rented proportions, discount of 0.5*140k =70 K capital gain subject to tax based on my marginal tax rate that year.

Under the new rule slightly confused how it would be calculated. Do I have to get an evaluation on July 2027 to work out the accruals before that, and that portion is under the old rule. After 2027 Jul is the new rule?
How would the proportion calculate?

Since it’s indexation based. Would it be proportion of years doesn’t matter any more.
Obtain two valuation, one at 2027 Jul. one at 2029 before moving in.
Before July portion (old rule. 50% discount on gain)
2027-2029 portion (cpi indexation/30% min)

Assume a round number for calculating purpose
Say scenario #1
valuation was
2027 Jul: 1.35m
2029 before moving: 1.45m
CPI: 2% per year over 2 years

CG for tax will be (assume marginal tax rate > 30%)
50k * 0.5 =25 K
1.45m - 1.35m * 1.02 * 1.02 =0.0455 m = 45.5k
Total CG for tax: 25k+45.5k =70.5 K

Say scenario #2
valuation was
2027 Jul: 1.35m
2029 before moving: 1.45
CPI: 5% per year over 2 years

CG for tax will be (assume marginal tax rate > 30%)
50k * 0.5 =25 K
1.45 - 1.35m * 1.05 * 1.05 =-0.0384 m (-38.4K)
Total CG for tax: 25k -38.4K =-13.4 K
Carry a loss of -13.4K

Would this be correct or they will use the entire gain between 2027 to eventual sell (14 years) adjust CPI and proportion rented time for that period (2/14) for tax.
Assume an annual 2% cpi over 14 years.
1.35m adjusted cost base become 1.78m roughly
The CG will be 220k.
Proportion to rented years 220k *2/14= 31k
Total CG for tax: 25k (prior 2027 Jul) + 31k = 46k

These are the two ways I can think of.
What do you all think?

Thanks.