Ask Paul: I can pay off my investment property in full but should I?

I bought my first home from my super last year and the tenant has been in the house for eight years.

I am claiming back on getting small projects done to the property, such as painting the external wall, etc.

I have ample funds to pay for the house outright but I took out a loan with Bendigo and Adelaide Bank for $46,000 just to get a good credit rating, to be honest.

I plan to retire next year and move back into the property, which I will finish, but should I pay it off outright now or keep making monthly payments until I am ready to retire?

That is a nice position to be in, Kaye.

I am not quite sure why you will need a good credit rating as you move into retirement, but it can't be bad to have one!

I don't know a lot about your tax situation, but it seems to me that continuing to make monthly payments while the property is rented is a good plan.

Maintenance on the property should continue to be tax deductible while the property is rented, providing of course the work done is not an improvement.