Why I own a property but rent my home

Technically, I don't pay rent. I mean I pay it, but it's not actually me doing it – hence the word technical.

It's often been said to me that rent money is dead money, and while this has some truth to it, so too does the saying that when you buy a house using debt, you can become a slave to it, and sometimes that's a life sentence.

For me, the desire to own property is a wise move in Australia, not just for the asset security but for the other things that property ownership can enable.

But paying down the mortgage and saving some money to invest elsewhere, be that in property or business, was not going to be achieved by ditching fancy breakfasts or a daily coffee ritual at my local cafe – I'm Gen X, but with Gen Y tendencies.

So I decided to take a brutal and unemotional look at my own numbers, which proved to me how a sea change out of Sydney would deliver a more affordable cost of living, and be a mortgage buster at the same time.

The average single dwelling property price in Sydney is about, or above, $1 million, while the average nationally is about $695,000, according to the Real Estate Institute of Australia.

But it gets interesting when you look at rental prices, which have started to soften nationally.

The average rental price for a detached house in Sydney is about $600, but the capital city average is around $480, says property research firm CoreLogic.

Compare that to weekly repayments of about $695 based on the average mortgage size of around $540,000 in New South Wales with a 4.75 per cent interest rate over 30 years – and you can see why renting looks financially more attractive.

Of course even if you take the national average home loan at $444,000 and calculate that the weekly repayment would be $571, and that's without paying rates and maintenance costs.

For me, the maths looked even better because our Sydney property was delivering double the rental return as a house on the far north coast of New South Wales – allowing us to smash the mortgage and cover the rent of our sea change property.

But as Natasha Janssens, founder of Women With Cents, also notes, a sea change doesn't necessarily have to be completely out of a capital city, it might just be in a fringe location or a more affordable area.

"There is a whole new breed of 'rentvestors', especially among the Gen Ys. These are people who prefer to rent in a more desirable location where they perhaps couldn't afford a mortgage, and instead they purchase an investment property in the outer suburbs."

Work matters and the tax appeal

 Not everyone can run a home-based business or work remotely, but with more flexible working conditions and better internet, the option is becoming increasingly more attractive for many Australians.

Then there's the tax appeal for people running a home-based business or eligible to claim work from home expenses.

For people paying the highest marginal tax rate, of which I am not one, it does make sense to rent while investing in property elsewhere.

As Susan Wahhab, author of the book Money Intelligence pointed out to me, for small business owners working from home, it makes tax sense to rent while claiming a portion of the rent, which is calculated based on the floor space used for business purposes, and yes you can include the garage if you keep a company car.

"You get to reduce your cash outflow after tax. On the other hand, if you own your home and run your business from home, you may need to claim that business portion of the mortgage and property costs against your business income," says Wahhab.

This of course is a tax effective strategy until you sell your home and end up paying capital gains tax on the business portion. This might not make it a good strategy longer term, so in this case it could again be better to rent.

None of this is rocket science, in fact using one asset to pay for its debt, and provide income is a prudent investment strategy, and it's one that works for me.

But often making the decision to rent out the more expensive property can be a difficult one – especially if that property is your dream house or location and has those invisible but very real emotional strings attached.

Bianca Hartge-Hazelman, former Fairfax Media journalist, now founder of the online women's money magazine financy.com.au.