Claiming FHOG and Interest on loan

[Maryha777]

Hi all,

Just want to confirm if this is true or possible. If i purchase my first home, get the FHOG, live in the property for at lease 6 months then turn it into a rental property I can then claim the interest on the loan as an expense to offset my personal tax.

Just a bit confused because my parents told me once you claim the FHOG even if you turn the property into a rental property you cannot claim the interest on the loan because you already received the grant.

Would really appreciate an answer. Thanks

 

[jrc77]

Hi all,

Just want to confirm if this is true or possible. If i purchase my first home, get the FHOG, live in the property for at lease 6 months then turn it into a rental property I can then claim the interest on the loan as an expense to offset my personal tax.

After the place has been converted to a rental property you can claim any future interest as a deduction (but not the interest you paid while it was your PPOR).

Just a bit confused because my parents told me once you claim the FHOG even if you turn the property into a rental property you cannot claim the interest on the loan because you already received the grant.

Shows that you shouldn't rely on parents for financial advise

At the time you convert the place into a investment property you should look at getting a valuation (for CGT purposes) and a depreciation schedule done.

Regards,

Jason

 

[Jamie M]

Just to elaborate on the other post.

The valuation will tell you the value of the property at the time it turns into an IP - this will prevent any contentious issues with the taxman if you sell it later on and have to pay capital gains tax.

The depreciation schedule will provide you with a schedule of all the items you can depreciate for your IP. It's important to get one and it will likely pay for itself within the first year.

 

[Propertunity]

Just want to confirm if this is true or possible. If i purchase my first home, get the FHOG, live in the property for at lease 6 months then turn it into a rental property I can then claim the interest on the loan as an expense to offset my personal tax.

Yes, you can, but 4 things:
1. You must also declare the rent you receive as income
2. Make sure you only ever pay IO on the loan, do not pay down principal if you intend turning it into an IP
3. Get a depreciation schedule done when an IP so you can claim this as a loss too
4. Get a valuation done at the time it becomes an IP
(all as the other posters have said)

Just a bit confused because my parents told me once you claim the FHOG even if you turn the property into a rental property you cannot claim the interest on the loan because you already received the grant.

Parents are wrong on this point as the others have said.

 

[D22]

Does it make any difference if you move in immediately, or rent it out for 6mo then move in for 6mo?

 

[morg]

I converted a PPOR to a rental 12 months ago.
Agree with the responses so far, and just wanted to add that from the research I did when we converted it, it seems that the holding costs, such as rates, insurances etc. whilst it was our PPOR can be added to our cost base for CGT calculations.
I haven't tested this, as we are still holding it.
When it comes time to sell I'll certainly be guided by my accountant's advice, but I'm hanging onto all my old bills just in case.

 

[Bargain Hunter]

Does it make any difference if you move in immediately, or rent it out for 6mo then move in for 6mo?

You have to move into the property within 12 months and live in the property for a continuous 6 months.

You can rent it out prior to moving in however this may impact on your right to any stamp duty reduction.

Regards

Andrew