BACKGROUND
In Aug last year our tenant went into respite, then died. Agents told us property was not at a rentable standard - a long list of non-quick fix items. We tried to sell the property but did not receive any reasonable offers and chose to renovate the property ourselves. We have a LOC purely for the renovations. The house had to be restumped, all bearers and joists replaced, there was no access underfloor so all floors had to come up - some had rotted through. Basically we gutted the inside of the house (full of asbestos). We have had it rewired, replumbed, it will have 100% new plaster, floors, carpet, kitchen bathroom - we added and ensuite and walk in robe to master (still 6-8 weeks from completion).
We had sever delays becasue of restumper who promised to start in Nov but finally did job in Feb - costing us time and $$$.
dilemmas / questions
Do we rent or sell when finished?
(possibly make 100k before tax if sell OR almost cash +ve if we rent - have ppor loan of 200k owing)
How does all this work tax wise?
What is claimed in the current financial year? What is claimed when we sell?
The LOC is 80k - when we sell is the 80k added to our purchase price of 130k (purchased 7 years ago)? So will the cost base be 210k and anything above that we pay CGT on?
I have kept a record and all receipts of everything bought / spent on the reno. We have done most of the work ourselves with the exception of plumber, electrician, restumper etc to save money. Our LOC did not come with a keycard just a cheque book - which is useless when you buy stuff from Bunnings etc so I have kept a log and reimbursed our savings account for reno related purchases.
Basically we don't have a good accountant, we don't know what to do, and the end of the financial year is almost here. We are in Country Vic but I am willing to drive to Melb to see the right person.
Has anyone else done something similar? What is your experience? Who knows a good accountant/advisor who can help me please.
In Aug last year our tenant went into respite, then died. Agents told us property was not at a rentable standard - a long list of non-quick fix items. We tried to sell the property but did not receive any reasonable offers and chose to renovate the property ourselves. We have a LOC purely for the renovations. The house had to be restumped, all bearers and joists replaced, there was no access underfloor so all floors had to come up - some had rotted through. Basically we gutted the inside of the house (full of asbestos). We have had it rewired, replumbed, it will have 100% new plaster, floors, carpet, kitchen bathroom - we added and ensuite and walk in robe to master (still 6-8 weeks from completion).
We had sever delays becasue of restumper who promised to start in Nov but finally did job in Feb - costing us time and $$$.
dilemmas / questions
Do we rent or sell when finished?
(possibly make 100k before tax if sell OR almost cash +ve if we rent - have ppor loan of 200k owing)
How does all this work tax wise?
What is claimed in the current financial year? What is claimed when we sell?
The LOC is 80k - when we sell is the 80k added to our purchase price of 130k (purchased 7 years ago)? So will the cost base be 210k and anything above that we pay CGT on?
I have kept a record and all receipts of everything bought / spent on the reno. We have done most of the work ourselves with the exception of plumber, electrician, restumper etc to save money. Our LOC did not come with a keycard just a cheque book - which is useless when you buy stuff from Bunnings etc so I have kept a log and reimbursed our savings account for reno related purchases.
Basically we don't have a good accountant, we don't know what to do, and the end of the financial year is almost here. We are in Country Vic but I am willing to drive to Melb to see the right person.
Has anyone else done something similar? What is your experience? Who knows a good accountant/advisor who can help me please.
