1976 house, rent it out/or sell/depreciation questions please

Hello,

I've finished up a reno[for a bit of a learning curve] and I would like to rent it out now[going from ppor to investment]

but because of the age of the house 1976, is it worth renting out [around 320-340 per week market] or sell it off [increase in value won't be that strong]

I know it's a common question.. but any opinions/answers from you experienced, knowledgeable investors would be greatly appreciated.



Other option is... rent it out furnished -- lot of claims for furniture, kitchen gear etc that could help out the tax return.
 
Sorry way too short on information. The year of construction has no bearing.

What did it cost, what would it cost to hold and what would it rent for.
 
ahh good to know, so year of contstruction is not important? i thought it was.

rent as above, 320-340

will keep searching for links....
 
Year of construction is used by a quantity surveyor when/if you have a depreciation schedule done. Not all IP's have one of these done.
 
ahh good to know, so year of contstruction is not important? i thought it was.

rent as above, 320-340

will keep searching for links....

Twobobsworth asked how much you payed for it.

How much it costs you to hold it, so -ve or +ve geared. And we know the rent.

You've told us how much it rents for, but no other information. Have you payed the loan, or are you still paying it?

If you want help from us you've really got to tell us more.

The year doesn't matter, honestly, but the amount you paid, holding costs, all need to be taken into account. Then we can help you out a bit :)
 
Further, for a permanent (as against holiday) rental you would not normally include any furniture.

There are exceptions like serviced apartments and the like where there are short stay and long stay arrangements. Also some townhouse or villas may have clothes dyers included and sometimes even washing machine, included to facilitate laundries in cupboards or other awkward spots.

But for a bog standard rental house in the burbs - no furniture. The tenants are all ready hard enough on the plumbing, kitchen, tiles, etc, imagine what they will do to your furniture.

Cheers
 
ahh good to know, so year of contstruction is not important? i thought it was.

I believe it is important for building depreciation.

Post Sept 1987 construction allows you to claim the building (depreciable for 40 years). Pre 1987 allows you to claim things like hot water systems, TV antennas, letter boxes, etc but not the house itself.

So all things being equal you're better off buying a 1988 house than one built in 1986 for tax reasons. But that's about it and in practice other considerations can swamp the tax savings of a newer house.

But things are usually not equal and if the 1976 property was good value in a handy area it would be silly to sell unless you had to (or saw better value elsewhere). Given that it's been done up it would surely be more attractive to the tenant than an unrenovated place 10 years younger.
 
I believe it is important for building depreciation.

Post Sept 1987 construction allows you to claim the building (depreciable for 40 years). Pre 1987 allows you to claim things like hot water systems, TV antennas, letter boxes, etc but not the house itself.

So all things being equal you're better off buying a 1988 house than one built in 1986 for tax reasons. But that's about it and in practice other considerations can swamp the tax savings of a newer house.

But things are usually not equal and if the 1976 property was good value in a handy area it would be silly to sell unless you had to (or saw better value elsewhere). Given that it's been done up it would surely be more attractive to the tenant than an unrenovated place 10 years younger.
I think it's actually 1985 not 1987. But I wouldn't base my decision on selling or renting a place out based on potential depreciation benefits.
 
I think it's actually 1985 not 1987. But I wouldn't base my decision on selling or renting a place out based on potential depreciation benefits.

You are correct, but the depreciation back then was a higher rate of 4% pa for 25 years. This period has just about finished so is pretty irrelevant now.

Whereas a house built in late 1987 has a lower rate of depreciation (2.5%) but this is over a longer term (40 years) so this is still applies for a while yet.

How significant is it? A small unit might have cost $40k to build then. 2.5% of that is $1k possible tax deduction. Multiplied by the marginal taxable rate this figure falls again.

So it's nice to have but not a deal breaker as you say.

Newer places have higher construction costs (say $200k due to inflation) and more years to depreciate before they reach zero. Depreciation is typically how new property spruikers can claim their properties are positive cashflow, but this requires a high job income to achieve. And if you're paying a premium to buy new, this can wipe out the benefits from depreciation.
 
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