PPR to IP - Recommended things to take care of to make tax time easier in future

**Apologies, meant to post this under the tax section***

Morning all,
We are in the process of moving out of our newly renovated PPR and renting a place in a new town for work. Our home will be rented out while we're away, and we may or may not ever move back into it depending on how long I'm away from work and whether or not we have kids before we return.

I have had a valuation done as I topped up the home loan to repay debt with a new split (largely money spent on renovating the premises), and have left the home loan splits on interest only. We'll be prioritising paying down the non-deductable split.

The property will be listed for rent this week but won't be vacant until 30 June, earliest possible move in date will be 1/7/2015. I didn't want to complicate this year's tax which is otherwise straightforward with rental property shenanigans.

Things I had on the cards for next year that aren't currently claimable that will be were:
  • The interest on the loans used to purchase the properties - these have not bee contaminated.
  • Body Corp/Sinking Fund/Water/Rates/Property Management Fees
  • LMI relating to the original loans used to fund the purchase - not the LMI on the top-up that was for non-deductible purposes.
  • Depreciation? When should we get a depreciation schedule done up? We spent about $35-40k renovating, replacing floors, wardrobes, kitchen, taps, painting, air con, kitchen appliances, ceiling fans etc...The building itself is a 35 year old unit but internally it's basically brand new.

Any traps for new players as to things we should be doing at this point?
 
If you are moving and renting then you can use the 6 year CGT exemption rule to your advantage.

Yes you will want a DS done, you will get that all at 2.5% pa + maybe some small asset pool faster writedowns.

Apart from that, you may wish to consider switching your loan to IO. Your LMI paid can be written off at 20% pa on a prorate basis.
 
Sounds like the bank has done its valuation. Do you have a copy? I would probably do another one myself as of 1 July telling the valuer the purpose. It may be a bit higher.

Keep a record of all expenses incurred while you were living there as well as most of these will be able to be used to reduce CGT when you eventually sell.
 
If you are moving and renting then you can use the 6 year CGT exemption rule to your advantage.

Yes you will want a DS done, you will get that all at 2.5% pa + maybe some small asset pool faster writedowns.

Apart from that, you may wish to consider switching your loan to IO. Your LMI paid can be written off at 20% pa on a prorate basis.

Hi Dave, the deductible loans are I/O and have been since we purchased as this was always the plan, just earlier than intended.

The LMI on the loans used to purchase the home will be claimed, the LMI on the personal use/renovation refinance top-up won't be claimed.

Sounds like the bank has done its valuation. Do you have a copy? I would probably do another one myself as of 1 July telling the valuer the purpose. It may be a bit higher.

Keep a record of all expenses incurred while you were living there as well as most of these will be able to be used to reduce CGT when you eventually sell.

I have a copy of the valuation from the bank, however hadn't considered doing another one at 1 July. The val we got wasn't disappointing but looking at comparable sales I would have no issue getting 5-10% more. Unfortunately as some of my loans are fixed and our current income situation would make a refinance more challenging, I am stuck with the lender and as a result was advised that despite the crap val even if we got another valuation from a valuer on the lender's panel, the bank would take the lower of the two.

I will make sure our records are as intact as possible.

Thanks for the help.

At this stage I've advised the PM that we would like to pay for all repairs and maintenance personally and did not want them deducting them from the rent. We are not in a position to establish a LOC to pay expenses from at this stage, but by the end of next year will have changed our finances around to accomodate this.

Any other tips for a first time landlord? :eek: I've been on the outside looking in for a while...
 
You mention a top up above. Is this under a separate split? if the top up was spent on things other than related to the property the interest won't be deductible so you should split the loan if not already.
 
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