Own Property then IP

[evila]

Hi all,

Let´s suppose that I initially buy a house to live in, but after a year or two (and before paying out the mortgage) I decide to move somewhere else and rent the property.

Would the interests be tax deductible?

Thanks in advance for any pointers,

Enrique.-

 

[Rolf Latham]

Hi Enrique

Yes, the interest on the loan originally borrowed would be deductible.

Go for a nice Interest Only loan, with an attached 100 % offset acct.

Dont pay any extra money onto the loan, simply park any spare cash in the offset.

Then when you move you have the chance to maximise your deductions

ta

rolf

 

[Glebe]

Evila,

Further to this, if you move back into the house within 6 years of renting it out you will have no capital gains tax to pay when you ultimately sell it, so long as you weren't claiming some other place as your principal place of residence in the meantime. Pretty cool huh?

 

[HomeBuy]

Principal place of residence, exemption on CGT

Evila,

Further to this, if you move back into the house within 6 years of renting it out you will have no capital gains tax to pay when you ultimately sell it, so long as you weren't claiming some other place as your principal place of residence in the meantime. Pretty cool huh?

Hi Glebe,

With regards to your comments above. Do you know how long someone would have to move back into their Principal place of residence within the 6 years in order to be exempt from CGT when selling?? Or how long in total they have to occupy the property for? I've visited the ATO site and it's a bit vague...

I bought my house in April 2004 and moved straight into it for 6 months in order to receive the FHOG. Since then I've been living with my parents and also spent a few months living/working interstate. My house has been occupied by tenants ever since, but would like to either demolish and build on it to live in future or sell it in a couple of years time. I've been told by several that I need to move back in to my house for another 6 months and by another for 3 months before the 6 years is up from when I first purchased the house to avoid CGT when I sell.
I also bought another IP this year but have never lived there myself.

Thanks I hope you or someone else can help clarify this for me.
HomeBuy

 

[tubs]

My understanding is that you have to move back into the house and live in it. There is no minimum time. You could live there for one day. BUT you have to be able to prove that you legitimately moved back in, and didnt pretend to do it for tax reasons.

By moving back, it means changing your drivers license, voting registration, connecting gas/electricity/water in your name etc.

Basically, you have to really live there, but not for any specific time.

That's my understanding anyhow.

 

[want2bewealthy]

If you purchase before 30th June this year you will also be elightable for the increased (by $7000) first home owners grant and stamp duty concession which is enough to fund your repayments for a year or so, dont forget that, Id personally be buying to live in as long as you are paying about as much in rent where you are currently otherwise Id look at an investment, do the numbers on all scenarios and the decision will speak for itself, half n hours work could save or make you thousands of dollars richer, thats quite a good wage and should not be passed up, also remember that even if you bought an investment first and never live in it, when you do purchase your own 'home' you are still elightable for the FHOG and concession but it may only be $7000 by then plus stamp duty concession.

 

[Qlds007]

If you purchase before 30th June this year you will also be elightable for the increased (by $7000) first home owners grant and stamp duty concession which is enough to fund your repayments for a year or so, dont forget that

Sorry but this is clearly not the case.

You cannot claim the additional $7000 because you move back into a property on which you originally claimed the first $7000.

 

[want2bewealthy]

If you purchase before 30th June this year you will also be elightable for the increased (by $7000) first home owners grant and stamp duty concession which is enough to fund your repayments for a year or so, dont forget that

Sorry but this is clearly not the case.

You cannot claim the additional $7000 because you move back into a property on which you originally claimed the first $7000.

I didnt think the poster already had a property let alone one they have lived in or is moving in n out of? if you have property, and have only ever rented them out and purchased them all after July 2000 then you can claim the increased FHOG until it runs out as long as you reside there within 12 months and stay for at least 6. Thats why I see good value purchasing a PPOR now combined with low rates and good deals around.

 

[Qlds007]

I bought my house in April 2004 and moved straight into it for 6 months in order to receive the FHOG.

Maybe we are referring to 2 separate posts ?

Your later comment is correct.

 

[want2bewealthy]

Hmmmm, it seems we are on a different level, these things happen.