You won't attract capital gains on PPOR so why not sell and get something cheaper and pay down some debt. Buy something that needs painting and tidying up, then use it to live in it to tide you over till baby is a bit older and you can get something better. I guess this is not feasible if baby is imminent but I've successfully moved house with just 2 months before birth.
In meantime look at the IP which has gone down in value and see if there is anything you can do to it to lift the value so you can up the rent a bit. I tell you what there is nothing nice about juggling bad debt and poor performing portfolio with bringing up a baby while having no cash flow. Very stressful.
If you rent out your PPOR or try and use it for tax purposes in any way, you will lose the full amount of capital gains exemption - that is not so desirable. Can you get it revalued and try and get some extra cash (non-investment) to tide you over?
In meantime look at the IP which has gone down in value and see if there is anything you can do to it to lift the value so you can up the rent a bit. I tell you what there is nothing nice about juggling bad debt and poor performing portfolio with bringing up a baby while having no cash flow. Very stressful.
If you rent out your PPOR or try and use it for tax purposes in any way, you will lose the full amount of capital gains exemption - that is not so desirable. Can you get it revalued and try and get some extra cash (non-investment) to tide you over?