We currently owe $250,000 and it would sell for around $360,000, and rent for around $350 a week. Would it be better to sell or rent?

Q.

We have bought a new property for $390,000 and rather than selling our existing house we would like to rent it out. We currently owe $250,000 and it would sell for around $360,000, and rent for around $350 a week. Would it be better to sell or rent? What are the tax implications for the existing home loan? Should I change it to interest only?

The benefits of selling the existing house is that any capital gain should be tax free and the sale should release funds that will enable you to have a smaller non-deductible debt on the new property. Remember, when you move out and the tenants move in your property will most likely lose 10% of its value. Of course, if you think it has very good potential you could keep it and outgoings such as interest on the existing loan and rates and maintenance will be tax deductible. If you decide to keep it convert the loan to interest only so you do not lose your tax benefits over time.