PPOR with tenants - investment property?

Hi all

Hoping for your views on our situation.

We are looking to purchase a PPOR in the ACT. The place we have found is presently tenanted, through to mid 2011. The agent has indicated the tenants would be prepared to leave earlier (i imagine if the price is right).

We are now thinking that we might keep the tenants there and move in when the lease expires.

My question is - in this scenario, can we treat the property initially as an investment property (ie. claim stamp duty and loan expenses) even though our intention is to move in at a later date?

And for tax purposes does it matter what type of loan we have taken out? We have organised an "owner occupier" loan, rather than an investment loan, with the bank.

Thanks indeed for your views.
 
My question is - in this scenario, can we treat the property initially as an investment property (ie. claim stamp duty and loan expenses) even though our intention is to move in at a later date?
Good question, not sure.
Monkey said:
And for tax purposes does it matter what type of loan we have taken out?
ATO doesn't care about that; the interest is still claimable.
 
My thoughts would be that it would be better to purchase as PPOR as stamp duty is lower for owner occupiers, not sure about ACT.
 
The tenants are probably mentally prepared to move out - I know every time I've been a tenant in a house for sale I've immediately started looking for a new place - even when an investor wants to buy it (the last investor that purchased a place I was in they wanted to practically gut the place WHILE I was there - screw you, I'm moving out).

Go a long settlement with vacant possession, give them heaps of time to move out, chip in for removal costs if you're feeling nice. And don't get horrible and take their entire bond off them if they aren't out by the time you get the place.
 
Firstly YOU need to decide do you want to live there or use it as an investment property.
Are you a first home owner? Are you eligible for stamp duty concessions as an OO? If not then having it as an investment property can give you a nice chunk of cash back, particularly as stamp duty is deductible in the ACT. If you are eligible for consessions however, you would miss out on that (which might be better?).

For ATO purposes, it doesn't matter if the loan is classed by the bank as OO or Investment purposes - the interest is still deductible. For the Bank, you would have to ask them - each bank is different. How far through the process are you? If you already have approval and are close to settlement I personally wouldn't worry about the bank (of course I would never advocate lying to them either ;) ).

You can definitely treat the property as an investment until you move in mid 2011 - but just remember that CGT will apply until you actually move in and make it your PPOR. (actually now I think about it, this late date for occupation would probably exclude you from any stamp duty concessions anyway, so I would definitely be claiming the stamp duty, etc, unless you plan to get the tenants out earlier.)

Sorry if this doesn't make much sense and I am rambling, my brain is on holidays at the moment...
 
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