Before anything else it might be important to mention that I'm single and 26yo, working in a stable job in the Sydney CBD, so yes it'll be a single income paying for my loan(s).
Here are the 2 plans I have. Let me know which one you think is best.
Plan A:
- Buy a 2-br unit as a first time home buyer (owner occupied)
- Receive $7000 from the government
- No investment property tax benefits on expenses/interest
- Live in one room and rent out the other room; calculated it to be 35-40% of my monthly loan repayments
- Buy the same 2-br unit as a property investment
- Would not receive $7000 from government
- Get all tax benefits on expenses/interest
- Rent out the whole unit; calculated it to be 75-80% of my monthly loan repayments
Fast forward 5 years, assuming that's how long it takes for negative gearing to become neutral/positive. Which of the two paths would save me more money? With Plan A I get $7000 and receive 35-40% of my repayments from renting out the other room. Would that scenario save me more money than Plan B?
I'm thinking Plan A might be a better choice. Let me know if anyone here has been on the same dilemma.