HELP Living in a dual occ IP?

[dafunk]

Hi Everyone,

i'm not sure if this is the right part of the forum to post this question so forgive me if it should be elsewhere.

I stumbled across a house with a converted "granny flat".
For the first time ever the granny flat wasn't wishful thinking and something entirely finished, habitable and seperated from the house nicely

My question is I want to live in the granny flat whilst renting the house out through a PM and living rent free for a while

But because the granny flat is not legitimate with council (yet) and does not have seperate metres, is there any massive implications with me living there whilst renting the main house out?

I would be funding the place with equity from another IP.

I'm not sure if I should be buying this as an IP or PPOR?

I'm not entirely sure of the tax or future borrowing capacity implications...

Help...

Cheers

dafunk

 

[Propertunity]

My question is I want to live in the granny flat whilst renting the house out through a PM and living rent free for a while

Fine.

...and does not have seperate metres, is there any massive implications with me living there whilst renting the main house out?

It would be easy to get the electricity separated and a meter installed. If you don't want to do that, then you will need to up the rent on the house to include electricity (in NSW, if not sep. metered then you cannot charge for it). Water the same.

I'm not sure if I should be buying this as an IP or PPOR?

IP probably.

I'm not entirely sure of the tax or future borrowing capacity implications...

If treating it as an IP, then only the interest associated with the loan for the house not including the granny flat (work out on floor m2 basis) would be deductible.

Get a PM to handle the rental of the house (just my opinion), and make sure the lease drawn up specifically excludes the granny flat.

 

[Ideo]

Hi Everyone,

i'm not sure if this is the right part of the forum to post this question so forgive me if it should be elsewhere.

I stumbled across a house with a converted "granny flat".
For the first time ever the granny flat wasn't wishful thinking and something entirely finished, habitable and seperated from the house nicely

My question is I want to live in the granny flat whilst renting the house out through a PM and living rent free for a while

But because the granny flat is not legitimate with council (yet) and does not have seperate metres, is there any massive implications with me living there whilst renting the main house out?

I would be funding the place with equity from another IP.

I'm not sure if I should be buying this as an IP or PPOR?

I'm not entirely sure of the tax or future borrowing capacity implications...

Help...

Cheers

dafunk

I'm concerned about the leap between

I stumbled across a house with a converted "granny flat".
For the first time ever the granny flat wasn't wishful thinking and something entirely finished, habitable and seperated from the house nicely

And

But because the granny flat is not legitimate with council (yet) and does not have seperate metres,

If you want to charge separate water and electricity it needs to be separately metered. And you will need approval for it. You cannot do it as complying development as CDCs cannot be issued retrospectively. It will have to be done through Council.

 

[dafunk]

Thanks for the fast responses!

The metering is the part i know least about.

What steps/approvals are required to get a meter installed?

I've spoken to council and they are saying they would not retrospectively approve a converted granny flat

If this is the case what are my options moving forward?

My simple mind is saying a pro rata amount already included in the rent.
I would definitely use a PM to manage the tenants

I'd like to put in an offer soon but the price must reflect the true costs involved

 

[Propertunity]

What steps/approvals are required to get a meter installed?

Electricity meters are easy to arrange. Contact a sparky who can do the prep work and he/she will have a contact within the local Utility company that can install an additional meter. (allow $1,500)

Council woun't install a sep. water meter without the development being approvaed as Ideo has said. You can either suck up the cost and pay for the water yourself as a LL or have a plumber install a flow meter between the house and the granny flat so usage can be established and the water bill pro-rata'd. (allow $500)

 

[travelbug]

Will you have another PPOR. If not I'd assume you'd be better buying it as a PPOR and using the 6 year rule to avoid CGT.

With regards to water- you are only losing out on the usage as you are liable for the rest (and only half as you are using it too). So the cost is negligable.

Question to others- would he need to NOT rent it out first to claim the 6yr (as he IS living there but not in the whole place)?

 

[dafunk]

So what is the illegal bit?

No I don't have a PPOR I am currently renting and have an interstate IP.

I've spoken to a couple accountants and it seems like a very grey area all round

From financing it with IP equity and offset money for non investment purposes (ie a PPOR) to losing a good portion of my CGT exemption due to renting out a portion of the property whilst living there.

The whole idea of this purchase was attempting to live rent free for at least 2 years before reassessing my position

If I could pull that off I'd be in a good position cash and borrowing capacity wise for additional IPs and eventual PPOR


Could someone answer this then

If I didn't sleep in the unapproved granny flat would there be an issue with council leaving it as is?
Ie: A shed lined with insulation and plaster with a bathroom and a kitchenette?
If I eat, shower and read somersoft posts in the shed then walk out and sleep elsewhere? Can I sleep in a caravan/camper van/camper trailer?

Could I close off the laundry of the main house from the rest of the house and add a door to the outside and make it a bedroom for myself? Of course I'd make a laundry elsewhere for the tenants and provide separation between the dwellings.

I'm trying to figure out ways to stay legal and rent free for a reasonable cost for 2 years