A Plan

[MRCALCULATOR]

Hi all,

I would like to post my current and future plans and get your thoughts on what would the best action to take. I currently live in my PPOR that I purchased as an investment property some years ago, which was purchased for $225,000. Initially it was rented out for 2 years and I also had a depreciation report done which was returning quite a good annual tax return. I believe because of this fact that I would have to pay capital gains on this property because I didn’t initially live in it. Over the last few years we have lived in this PPOR we have reduced the properties loan down to as low as $87,000 and now after extensive renovations it has climbed back up to $170,000 owning. Now though we plan to move to our parents place for a period of time and rent out what was our PPOR and was wondering if the renovations we had done where available to be claimed as a depreciation over a period of time?, and also weather the figure owing on the loan $170,000 would be what we would be able to negative gear against, or the figure of $87,000 that it was at one stage would be the amount we would have to work off?.

I also have another investment property which is in my name only as are all my properties. I am now married and the whole reason we are moving out of our PPOR is so that we can save an amount of money in the quickest time possible in the mind to buy some land and build. Now to complicate things even more we plan to rent out the house we plan to build after firstly living in it for 12months. What would be the best way in your opinion to set the loan up for the planned future build? Interest only, In my Wife’s name, In my Name, Set up a Trust?. Your thoughts on this matter would be greatly appreciated,

Regards

 

[wobbycarly]

Wow - complicated, and I would really recommend an accountant, but I'll put my 2c worth in.

Hi all,

I would like to post my current and future plans and get your thoughts on what would the best action to take. I currently live in my PPOR that I purchased as an investment property some years ago, which was purchased for $225,000. Initially it was rented out for 2 years and I also had a depreciation report done which was returning quite a good annual tax return. I believe because of this fact that I would have to pay capital gains on this property because I didn’t initially live in it.

You would only need to pay CGT on the growth while it was rented out and ONLY if you had bought another PPOR. If you were renting during this time, then the property should still fall under the 6 year rule and be CGT exempt. (The depreciation may complicate things - accountant please?!?)

Over the last few years we have lived in this PPOR we have reduced the properties loan down to as low as $87,000 and now after extensive renovations it has climbed back up to $170,000 owning. Now though we plan to move to our parents place for a period of time and rent out what was our PPOR and was wondering if the renovations we had done where available to be claimed as a depreciation over a period of time?,

You can depreciate the renovations. However, depending on the life of the items included, they may already be partly depreciated even though you haven't claimed the depreciation. In other words, the life has decreased, you've used the item(s) for personal use, so you can only claim the depreciation on the bit that's left.

and also weather the figure owing on the loan $170,000 would be what we would be able to negative gear against, or the figure of $87,000 that it was at one stage would be the amount we would have to work off?.

The interest on the entire loan would be deductible. (Depending on the rent, it may not actually be negatively geared, but you can reduce the tax payable on the rental income by the interest paid.)

I also have another investment property which is in my name only as are all my properties. I am now married and the whole reason we are moving out of our PPOR is so that we can save an amount of money in the quickest time possible in the mind to buy some land and build. Now to complicate things even more we plan to rent out the house we plan to build after firstly living in it for 12months. What would be the best way in your opinion to set the loan up for the planned future build? Interest only, In my Wife’s name, In my Name, Set up a Trust?. Your thoughts on this matter would be greatly appreciated,

Regards

No idea! Without knowing things like income levels, plans for work (kids coming at some stage and wife [or you] stops working?), etc, I certainly won't comment. Refer sentence 1 - check with an accountant on this one!

BTW, welcome to the forum!

 

[MRCALCULATOR]

Cheers

Thank you for taking the time to reply to my post I basically wanted to know if I was on the right track before I went and seen my ACC, I want to have a list of questions that I can ask in front of me. Thanks again


Regards