Claiming new construction interest and FHOG & stamp duty exemption [NSW]

[bmulyawan]

Hi,

I am building a new construction home and setup the loan as interest only which estimated completion by June. And i have submit form to claim duty exemption and FHOG

Question:
1. Can i claim this interest for tax deduction purpose from start of the construction until completion given the fact that I am claiming duty exemption and FHOG? Once it is completed I will use it as PPOR.
2. Will this violate my duty exemption and FHOG if I claim interest during construction (even this is allowed)? I assume it is not as the rule is to live there 6 mths continuous in first 12 months?

Thanks,

BM

 

[alexlee]

If the property is / will be your PPOR, it's for private use, therefore interest is not deductible.

 

[bmulyawan]

what if
1. I make it as investment after 6 month of living there? Can i claim deduction on interest of construction?
2. Otherwise the first 6 months I rent it out then after 6 months I live there as PPOR to satisfy FHOG requirement. Can I claim tax deduction on this? as 6 months construction + 6 months rent out

In fact how does ATO classified whether it is investment or PPOR?

 

[Scott No Mates]

To get fhbg you must move in at the firdt opportunity & within first 12 months. So by leasing the house before you move in is a breach of the grant conditions.

ATO & Office of Fair Trading might actually share information (funny that).

If you rent it prior to moving in then cgt will apply.

 

[Brady]

To get fhbg you must move in at the firdt opportunity & within first 12 months. So by leasing the house before you move in is a breach of the grant conditions.

ATO & Office of Fair Trading might actually share information (funny that).

If you rent it prior to moving in then cgt will apply.

I don't recall reading the it must be at the first opportunity, my understanding was that it was for a period of 6 months during the first 12.

 

[Terry_w]

what if
1. I make it as investment after 6 month of living there? Can i claim deduction on interest of construction?
2. Otherwise the first 6 months I rent it out then after 6 months I live there as PPOR to satisfy FHOG requirement. Can I claim tax deduction on this? as 6 months construction + 6 months rent out

In fact how does ATO classified whether it is investment or PPOR?

I think it is clear that your intention is to make it a PPOR so the interest would not be deductible. Once you move out it maybe.

 

[bmulyawan]

Brady: I think so too.
Terry: I assume once I move out i can not claim back the interest on construction loan? as it past 6 months (duration of i live in as PPOR)?

 

[Terry_w]

Brady: I think so too.
Terry: I assume once I move out i can not claim back the interest on construction loan? as it past 6 months (duration of i live in as PPOR)?

On what basis?

 

[bmulyawan]

On what basis?

different financial year? i.e construction is on previous financial year?

 

[Scott No Mates]

I don't recall reading the it must be at the first opportunity, my understanding was that it was for a period of 6 months during the first 12.

" At least one applicant will
occupy the home as their
principal place of residence
for a continuous period of 6
months, commencing within
12 months of settlement or
construction of the home. "

My interpretation is: commencing 'within 12 months of settlement' OR upon completion of construction. You would need to dig up the legislation for the definitive answer.

 

[Terry_w]

different financial year? i.e construction is on previous financial year?

Construction relates to building a main residence. I think it would be 'too soon' to claim. Best to ask your own accountant.