Is building a GF on your PPOR worth it?

Located in Inner West (Sydney).

In the upper tax bracket for income tax, and have PPOR.

Would you rather:

a) build granny flat in backyard of PPOR and rent BOTH dwellings and rentvest; or
b) buy another IP (and compromise on lifestyle)

Not too financially literate so unsure about any tax implications

 

Why does buying an ip compromise your lifestyle?

if you rent both current ppor and granny flat out, where will you live?

granny flat is good for cashflow but doesnt really add to cg. If you are at the top tax bracket, what do you need? Yield or cg?

 

Because the IP would be negatively geared

I would rentvest

Yield mainly

 

You might have to explain what ‘upper tax bracket’ means to you.

 

$180k + salary

 

Are you saving anything from your job income?

From your previous posts you are young. Do you need more cashflow? Or build capital growth for the future?

 

Have you run the numbers? What do they say?

 

no i havent run numbers. It would be more of a general consideration

 

I have a granny flat / shed conversion I'm undertaking at the back of my PPOR. The block is situated well with the gf access not impeding on the PPOR access. I plan to stay in the ppor and start with short-term accommodation for better $$ return at first. If the short-term is a headache with occupants, i'll market for a long-term tenant for less stress.

I'm young, 26, travel a bit for work, keep to myself, so don't see an issue with someone at the back helping with mortgage repayments (expected rent would be 70% of my mortgage repayments p.a.)

 

Renting the house AND GF means land tax could be a issue. Note you cant rentvest the GF...Just the former dwelling you have lived in.
Adding a GF can enhance net yield overall as the GF costs $200K approx now but can command a high rent. GF costs are through the roof. BUT the yield relative to costs (Return ofn Investment) is often far better than buying another.. GFs are a yield play.....They dont enhance wealth as such.