If you’re torn between buying your own home or an investment, here’s how I think about it.
I’ll keep it simple. A PPR is the place you live. It feels good, gives stability, and under the main‑residence rules, growth is typically CGT‑free. The downside is the interest on that home loan isn’t tax‑deductible, so every extra dollar you pour into it is after‑tax money. An investment property is the opposite. You don’t live there. Tenants help with the repayments, a lot of the costs can be tax‑deductible, but you’ll usually pay capital gains tax when you sell (with the 12‑month 50% discount if you hold long enough).
So which comes first? Be honest about the next 3–5 years of your life. If you’re starting a family, you want a certain school catchment, or you’re craving roots, a PPR can be the right call even if it’s not the “perfect investment.” If you value flexibility, want to live where you like and buy where it grows, and you’re focused on building your net worth faster with tax efficiency, then an investment first often makes more sense.
Let me give you a feel for the numbers. Say you’ve saved about $150k. If you buy a $1.0m PPR, most of that goes into deposit and costs. Your repayments aren’t deductible, so your cash flow tightens. You’re banking on long‑term growth and lifestyle benefits. If you buy a $700k investment, you might deploy $120–130k toward deposit and costs, keep a chunk in theoffset as a buffer, and let rent plus tax deductions help with the holding costs. Same savings, very different cash flow and options.
A big mistake I see is people trapping themselves with large non‑deductible home debt first, then trying to invest later with no buffer. Another common one is paying down a PPR, then redrawing to buy the investment and assuming it’s deductible. Often it isn’t, because deductibility follows purpose. Clean structure matters: separate loan splits, a solid offset, and an accountant and broker who talk to each other before you sign anything.
Here’s a simple path that works for a lot of clients. Start with a quality investment in a growth corridor that fits your budget and borrowing power. Keep your living costs sensible, stack cash in your offset, and let time and compounding do their job. When income is higher and your life plan is clearer, step into your PPR with confidence, ideally while keeping the investment working in the background. If lifestyle is the priority today, flip that order—but set it up properly so you’re not stuck with expensive, non‑deductible debt forever. A few non‑negotiables from me.First, buffers. Aim for 3- 6 months of total expenses across your offsets. Life happens—rates move, tenants leave, hot‑water systems die on a Sunday.
Second, stress‑test your repayments at +2% on the interest rate. If the numbers only “work” at today’s lowest rate, they don’t work.
Third, be grownup aboutinsurances—building, landlord where needed, and income protection via a professional.
Lastly, remember that vacancy and maintenance are part of the game; assume a few weeks of vacancy a year and some fixes.
If you want a simple rule from me, it’s this:
choose PPR first if lifestyle stability is worth more to you than speed of wealth. Choose investment first if flexibility, tax efficiency, and scaling a portfolio matter more right now. Neither is morally better. The right one is the one that fits your next three years and doesn’t blow up your cash flow.
If you’re unsure, run three quick checks:
- your true purchase costs(stamp duty, legals, inspections),
- your monthly cash flow after rent and tax on an investment or after everything on a PPR, and
- your buffer after settlement. If the buffer is thin, slow down. The deal will not be the last good deal you ever see.
And one last thing—don’t fall in love with a suburb because your mate bought it there. Let the data do the heavy lifting, and let your life decide the sequence. That’s how you keep your options open and your stress low.
General information only. This isn’t financial advice.