Thanks Guys for all your input, keep it coming.

I'm plainning on keeping the TD04 on at this stage.

Plan is to keep it for 5 years+ if all goes well.
EJ207 short block
Heads will need to be skimmed to suit
Anything else needed to suit?
All the work will be done by myself and a mate who is a mechanic on the weekends.

http://www.perth-wrx.com/vb/sale/627...arts-many.html

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No Subarus currently owned

if you plan to keep it that long would definitely build extra strong and extra reliable im sure in years to come you will want alot more power and be glad while you have your motor out now to build for the allowance .. depending on current funds that is ..

For the cost of an sti turbo these days it would be crazy to leave the td04 on.

I was in a similar situation to you myself a few years ago, but I hadn't blown my 205 yet (but I felt it coming)

STechnic did my build and sourced most of the parts for me, but the basics were:

EJ207
STi MLS head gaskets
Water pump
Oil pump
Fuel pump
ARP headstuds
Timing belt

The water pump, oil pump & timing belt were a 'while it's out' affair, as it's a good time to do them, but replacing the unknown age fuel pump was cheap insurance, as they are only about $100.

I did a few extra things with the build such as cams, turbo and TMIC, but I guess it will depend on how far your budget goes.
Turbo and TMIC are easy enough to do later on.

Yeah, will have to talk to the wife about budget. hahaha
But want it too last, so may need to spend more money.
At this stage i don't want to spend more than $4,000. Cause i just bought it last month for $7,000 and was mean't to be in good working order. Even got a mechanic to give it a good check over, but sure enough 900kms later the problems start. Such is life.

Do it properly and do it once mate , with that budget you should be able to do a new crate ej207 ,new oil pump , new timing and waterpump . Turbo can be done later but if you can stretch your budget just a tad a decent secondhand VF34 can be had which will bolt straight on . This motor and turbo combo will give you a decent push in the back but will be very reliable if your not chasing numbers the TD04 is very tiny and works quite hard .

These cars can be costly cutting corners with fixing them due to their age . While the motor is out replace the knock sensor it is cheap to do and a common failure with age . Also replace your MAF sensor and fuel pump as again these two things die quickly with age. Chances are if you don't they will fail at sometime in the near future .

Do it properly the first time and you will have a great car with no problems that will bring you years of enjoyment .