Live in Studio Rent out PPOR

Discussion in 'Adding Value' started by MethodMan81, 16th Jun, 2015.

  1. MethodMan81

    MethodMan81 Member

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    Hi

    Just after some input, I am currently looking at building a studio dwelling on my PPOR with the intention of living in it and renting out the established house.
    -Is this legal (Perth, City of Wanneroo) (I have been advised that it is)
    -Is there any insurance issues that i should be wary of
    -Is there any sort of CGT implications

    I was initially going to go down the route of a granny flat I would be over capitalising.

    Thanks for any input.
     
  2. travelbug

    travelbug Member

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    What do you mean by studio dwelling? Like a granny flat but smaller?

    Will it be a legal ie habitable room? If not insurance will be an issue.

    Insurance- Yes. You will need to let your insurance company know.

    Not sure about rules in Perth. You'd have to speak to council.

    CGT- Yes you will be liable as part of the property is rented out.
     
  3. thatbum

    thatbum law talking guy

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    Well its essentially going to be an ancillary dwelling right?
     
  4. MethodMan81

    MethodMan81 Member

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    Yes

    I was hoping that CGT would be exempt as the house is still my PPOR (same as if I was to rent out the house and lodge/board somewhere, I am guessing the 6 year rule would still apply though)
     
  5. Terry_w

    Terry_w Member

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    No it won't be exempt because the house will be earning income.

    You cannot claim the 6 year rule either as you won't be absent.
     
  6. Avatar1234

    Avatar1234 Member

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    I have read on Domain sometime ago that you can rent part of your home and claim CGT 6 yr exemption based on that.
     
  7. Kent Cliffe

    Kent Cliffe Momentum Wealth

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    You'll need to obtain a planning approval from the Local Council for the ancillary dwelling. The main consideration will be setbacks and car bays. For my clients I also suggest making the 2 dwellings operate independent of each other. (i.e. clearly defined separate area, laundry, drive way access and parking).

    I'd speak to your accountant regarding the tax side of things, as once it becomes income producing it would be considering an investment rather than a PPOR.
     
  8. Terry_w

    Terry_w Member

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    you should read the legislation instead. s118-145 itaa97
     
  9. MethodMan81

    MethodMan81 Member

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    Thanks for the advice.