Hi Gang,
I need a bit of advice here please.
If you had lived in an IP and moved out and rented a property, then I believe that the IP can be treated as a PPOR and is CGT free is sold within that 6 year period.
Great.
But while it is an IP (tenant in it and owner in rental accommodation) and negatively geared I take it you can still deduct the interest from your income (well the shortfall between rent and interest). I take it this does not affect the CGT free statues of the now IP?
So when you sell the property say at year 5 after moving out and you have been deducting the negative part of the gearing from your income over the past 5 years, is there any impact on the CGT aspect of the property.
Say you bought property for $250k, lived in it for a short while, then moved out and paid rent - you do not have any ppor in that time. Meanwhile for the next 5 years you continue deducting say $1,300 per month in shortfall between interest and income, plus rates etc (but no depreciation). Then you then sell it for $500k.
I believe it is CGT free and you have had the benefit of deductability of the interest. Is there any add back or altering of the cost base?
You have deducted interest on an investment that in effect looses you money, the only way you get an investment return on the property is through capital gain but there is no tax on this.
Am I right?
thanks
RightValue
I need a bit of advice here please.
If you had lived in an IP and moved out and rented a property, then I believe that the IP can be treated as a PPOR and is CGT free is sold within that 6 year period.
Great.
But while it is an IP (tenant in it and owner in rental accommodation) and negatively geared I take it you can still deduct the interest from your income (well the shortfall between rent and interest). I take it this does not affect the CGT free statues of the now IP?
So when you sell the property say at year 5 after moving out and you have been deducting the negative part of the gearing from your income over the past 5 years, is there any impact on the CGT aspect of the property.
Say you bought property for $250k, lived in it for a short while, then moved out and paid rent - you do not have any ppor in that time. Meanwhile for the next 5 years you continue deducting say $1,300 per month in shortfall between interest and income, plus rates etc (but no depreciation). Then you then sell it for $500k.
I believe it is CGT free and you have had the benefit of deductability of the interest. Is there any add back or altering of the cost base?
You have deducted interest on an investment that in effect looses you money, the only way you get an investment return on the property is through capital gain but there is no tax on this.
Am I right?
thanks
RightValue