Renting PPOR for only 2 years!!!

Hi everyone,

I was searching the forum but couldn't find a similar thread related to what I am planning to do.

I bought my PPOR about 3 1/2 years ago with P+I Loan and an Offset A/C attached to it.

I was recently offered a Job in South Africa for about ?2 years?, therefore moving Overseas and planning to rent my PPOR during only this time frame, so moving back to PPOR when this Job assignment finishes.

What I have done so far:
A) Put entire households in storage to rent PPOR empty.
B) Engaged a Property Manager to find a tenant and look after my PPOR.
C) Property Manager found suitable tenants to move in to PPOR next week.

My Questions are:
1) What else do I need to do to comply with law/tax regulations when the time for filling a Tax return comes?
2) Can I claim the ?interest ? from date PPOR became IP?, not planning to change to IO loan since this will still be my PPOR when coming back in 2 years, so prefer to keep it as P+I with offset A/C, unless really required/suggested.
3) Do I need to pay Land Tax on PPOR during these 2 years?, I got other IPs that already pay Land Tax but PPOR was previously exempted, not sure with new situation.
4) Do I need to engage a Quantity Surveying company to do a full Depreciation Schedule, not sure if worth doing/have to do it to claim deductions for only 2 years?
5) Do I need to get a Valuation done?, if so, can any Real Estate agent do this Valuation to be valid for CGT if I ever sale in the future?, Or what sort of entity can help with this Valuation to be valid to ATO.
6) What else can I claim or need to declare?
7) What else do I have to do in Australia before travelling that I cannot do while Overseas?
8) Any other advise to keep this as simple as possible?, as mentioned, PPOR is only going to be IP for 2 years and back to PPOR after that. So only trying to do the ?must do? things not to get in trouble and benefit from it as well.


Thanks!!!
 
1. Declare any income on your tax return
2. Can probably claim interest on full loan if no money has ever been redrawn
3. probably, would depend on the state the house is in
4. Do you or should you? Possibly you should to increase your deductions
5. Not if you will be claiming it as the main residence still
6 any expense incurred in producing the rental income
.7. Got a update and adequate will in place? Super succession plan separate to will. Are you director of any company or trustee of any trust? Considered a power of attorney?
8. Keep records of everything
 
B) Engaged a Property Manager to find a tenant and look after my PPOR.

Make sure someone is paying all the bills especially insurance.

I did a similar thing many years ago and with a condition for the PM to pay ALL bills for the property in my absence (written into PM agreement). On my return after ~2 years I discovered that PM had failed to pay insurance renewal, so property was uninsured for over 1 year:eek:
 
Pay for a valuation and get a depreciation schedule. Your circumstances could change.

Hi INVSTOR,

I just organized a depreciation to be done, it cost me around $700 but could claim around $10K per year on depreciation (building+contents) on Tax return, which is really great over the 2 years!

I am also looking to organize a Valuation, do you know any company in Perth to get this done?. I guess this company needs to be approved by the ATO?:confused:
 
1. Declare any income on your tax return
2. Can probably claim interest on full loan if no money has ever been redrawn
3. probably, would depend on the state the house is in
4. Do you or should you? Possibly you should to increase your deductions
5. Not if you will be claiming it as the main residence still
6 any expense incurred in producing the rental income
.7. Got a update and adequate will in place? Super succession plan separate to will. Are you director of any company or trustee of any trust? Considered a power of attorney?
8. Keep records of everything

Hi Terry,

Thanks for all really useful comments,

Could you please expand a bit more on point number 2, not sure why other people have to sell property to his partner or so to be able to claim the interest on PPOR once it becomes an IP?:confused:

As mentioned I bought this PPOR with P+I Loan and offset a/c attached to it, so are you saying I can keep it the way it is and claim the "interest portion" from the date the tenants move in until they move out?
 
Hi Terry,

Thanks for all really useful comments,

Could you please expand a bit more on point number 2, not sure why other people have to sell property to his partner or so to be able to claim the interest on PPOR once it becomes an IP?:confused:

As mentioned I bought this PPOR with P+I Loan and offset a/c attached to it, so are you saying I can keep it the way it is and claim the "interest portion" from the date the tenants move in until they move out?

Yes,

Generally interest is deductible if the loan was used to produce an income generating asset. In this case the original loan was used to purchase a house. Not income producing so no interest deduction. But once you move out it would be income producing, rent, so you could claim interest.

However, if you had paid the loan down to $100,000 and then redrawn $200,000 so the balance is now $300,000 this will be considered 2 loans. Loan 1 can be attributed to the house. Loan 2 for $200,000 can be attributed to whatever the borrowed money was used for. If you bought a $200,000 gold plated moustache this is a private expense and therefore the interest not deductible

People using a LOC can get into serious trouble because they are constantly paying down and redrawing. So they would have hundrreds of little loans in there and probably a high balance with little to none of the interest being deductible.
 
Make sure someone is paying all the bills especially insurance.

I did a similar thing many years ago and with a condition for the PM to pay ALL bills for the property in my absence (written into PM agreement). On my return after ~2 years I discovered that PM had failed to pay insurance renewal, so property was uninsured for over 1 year:eek:

Thanks Joe D,

I just called the insurance company to issue/send future renewals to PM, everything else was already organized ;). The only thing a bit difficult is to get the Land Tax bill to be sent to an email address or something like that, so how did you do it before, can you re-direct the Land tax to each PM or so?
 
The only thing a bit difficult is to get the Land Tax bill to be sent to an email address or something like that, so how did you do it before, can you re-direct the Land tax to each PM or so?

If it was your PPOR you wouldn't normally receive a Land Tax bill.

(nb: although it may show up down the track once the SRO discover it is being rented out, but you be be back in by that time.)
 
Hi INVSTOR,

I just organized a depreciation to be done, it cost me around $700 but could claim around $10K per year on depreciation (building+contents) on Tax return, which is really great over the 2 years!

I am also looking to organize a Valuation, do you know any company in Perth to get this done?. I guess this company needs to be approved by the ATO?:confused:
I just asked my accountant to recommend a company. Will look up who I used tomorrow.
If it was your PPOR you wouldn't normally receive a Land Tax bill.

(nb: although it may show up down the track once the SRO discover it is being rented out, but you be be back in by that time.)
I rented my PPor out for two years. My old PM contacted me about 6months after I moved back to advise he had a land tax letter. I received a bill for PPor. I contacted them to advise it was PPor and that we had moved back so they said to chuck the bill and amended records.
 
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