I bought an apartment and would like to rent it out.
Then I am going to rent a place for myself.
The idea behind this is so that I can claim on all the benefits associated with having an investment property
is this a smart way of doing it or is it better to live in the place and just pay off the mortgage?
and very importantly, where would you prefer to live re location, in your apartment or the one you propose to rent.
If you will be renting a similar apartment in a close location to the one you bought, better off staying in your apartment
How about you rent it to yourself.. lol
That's a great idea!
can I seriously do that???
no
Haven't looked into this in a while but people often live in an investment property initially so they can claim it as a primary place of residence. Otherwise you get the other "benefit" of an investment property - which is paying capital gains tax on it when you sell it.
Not sure if rules around this have been tightened since I looked into this many years ago.
That was normally done to get the first home grant (live in the property for 6 months)
No good unless you get very good benefit from negative gearing.
You would pay tax on the rent you get from your property (at your marginal rate) and you will pay after tax $ for the rent you pay for where you live.
but cant you claim and things like depreciation and interest payments from the bank etc?
Yes
That is why I said " no good unless you get very good benefit from negative gearing". Essentially if you are on a high tax bracket (high income) and you have a large mortgage (tax deduction for the interest) it may work out beneficial.
Owner occupier = no tax incentives. Landlord = many tax incentives. Therefore it usually works out better to lease out your property and rent somewhere else. The rules set by the government essentially subsidise you to speculate on capital gains in property. A big reason for the bubble were in now.
Don't forget the 6 year rule where you can consider your investment property as ppor for 6 years as long as you don't claim another ppor in the meantime. That means no CGT payable if you sell it within 6 years or no CGT on the pro rata 6 year portion of ownership considered as ppor if you own it for more than 6 years and sell later.
It depends on your situation. It's too hard to answer without taking into account:
Open a spreadsheet and try to factor in as much foreseeable incomes / expenses and decide it yourself.