Moving in to our IP

[Brett IP]

Hi All

I have two quick questions if someone is willing to answer ;
1 - In 2 weeks we move in to our IP, making it our new PPOR. It has been tenanted for 2 years.

Are there any claimable things we should do before or after we move in, considering it has been an IP for the whole time? I.e Some painting/repairs due to wear & tear. Or is that it once we move in? It does need a freshen up.

2 - For our old PPOR, which has been an IP since Dec 2010, the water bill has come through for it. The bill period is 01/01/11 - 30/06/11.

However, the consumption component is backdated, ofcoarse. Am I correct in saying I can claim the Wastewater Service & Water Service component (as its future related), but not the consumption section as thats when we were living there?

Thanks for your help.

Brett

 

[depreciator]

If you've rented it out for two years, it would be reasonable to claim the cost of this:

Some painting/repairs due to wear & tear.

Just don't go crazy.

 

[Mick C]

Hi All

I have two quick questions if someone is willing to answer ;
1 - In 2 weeks we move in to our IP, making it our new PPOR. It has been tenanted for 2 years.

Are there any claimable things we should do before or after we move in, considering it has been an IP for the whole time? I.e Some painting/repairs due to wear & tear. Or is that it once we move in? It does need a freshen up.

2 - For our old PPOR, which has been an IP since Dec 2010, the water bill has come through for it. The bill period is 01/01/11 - 30/06/11.

However, the consumption component is backdated, ofcoarse. Am I correct in saying I can claim the Wastewater Service & Water Service component (as its future related), but not the consumption section as thats when we were living there?

Thanks for your help.

Brett

Brett, many many years ago a very smart and highly ranked member of the ATO management gave me one good advice.

" if your moving into your IP- get a official valuation on it before you move in"

Why?? - any increase from the IP's last valuation price till the time you decide to sell it ( while it was your PPOR) is not subject to the CGT.

Some CGT is payable, but this will help legally reduce it.

Im pretty sure this still works now, as this advice was given to me a long time ago- any accountant can confirm?


P.s Yes you can claim the paints and repairs..

Regards
Michael

 

[marg4000]

Brett, many many years ago a very smart and highly ranked member of the ATO management gave me one good advice.

" if your moving into your IP- get a official valuation on it before you move in"

Why?? - any increase from the IP's last valuation price till the time you decide to sell it ( while it was your PPOR) is not subject to the CGT.

Some CGT is payable, but this will help legally reduce it.

Im pretty sure this still works now, as this advice was given to me a long time ago- any accountant can confirm?


P.s Yes you can claim the paints and repairs..

Regards
Michael

Basically incorrect.

It works that way if you change a PPOR to an IP (valuation), but when moving into an IP the capital gains will be apportioned on a proportional basis of the time it is an IP and the time it is a PPOR.

The only way to reduce the CGT is to make it your PPOR for a long time!!

As for repairs, you are only entitled to return the IP to the condition when you bought it. As it has only been an IP for two years you will be limited in what you can do. Keep it modest and you should have no problems.
Marg

 

[Perp]

I believe that marg4000 is correct, and Mick C has it wrong. Mick C's advice would only apply if you were moving OUT of your PPOR and making it an IP, as marg4000 said.

 

[Mick C]

Ops ...sorry my bad..your are correct , it's the another way around - it's PPOR > IP

Regards
Michael

 

[Mry]

Ops ...sorry my bad..your are correct , it's the another way around - it's PPOR > IP

Regards
Michael

Its ok, its was the quality of advice we come to expect from the ATO.

 

[Sunfish]

I don't lose sleep over details but I recently moved into a home I had built 10 years ago. The stuff that needed replacing had been fully depreciated anyway. eg Carpets.

Life goes on.

 

[w0nnie]

+1 for marg4000

i had this conversation with the ATO not long ago and asked 'should i just get a valuation done anyway'

the guy at the ATO said if it makes me feel better but they wont use it, they'll simply apportion the % of time it was a IP and PPOR and work out the CGT from that.

I wonder if you can get a ruling though, what would happen if it was a simple 2 bedder IP & then 5 years into it being a PPOR i put in a major reno to make it a 5 bed glamour?

 

[Perp]

I wonder if you can get a ruling though, what would happen if it was a simple 2 bedder IP & then 5 years into it being a PPOR i put in a major reno to make it a 5 bed glamour?

The cost of the improvements would be added to the cost base for the purposes of calculating CGT.

But if you spend $200K and add $500K of value, yes, because it was once an IP, some of the $300K profit will be taxed.

 

[Brett IP]

For our old PPOR, which has been an IP since Dec 2010, the water bill has come through for it. The bill period is 01/01/11 - 30/06/11.

However, the consumption component is backdated, ofcoarse. Am I correct in saying I can claim the Wastewater Service & Water Service component (as its future related), but not the consumption section as thats when we were living there?

Any ideas on this one?

 

[Perp]

Any ideas on this one?

I agree with what you said; you can claim the service charge that related to future use, but not the consumption charge relating to when you lived there.

 

[JandJ]

Thought I might revive this thread to get any advice which may cover our plans:

Had IP for 1 year.
Planning to knock down rebuild and make ppor.

Any thoughts on how CGT might be applied or how we should cover our backs ?