Simple (hopefully!) question on tax calc

[cletus]

Hi,

Quick question hopefully. I bought my first house last year and got a 12 month fixed intro rate (principal and interest) paid monthly. After just over 7 months of living in it I moved out and am now renting it out. From the point that it was available for rent it switches to being deductible right? Now, I'm paying 6.49% on the 22nd of each month. On 1 May it became an IP. With payments on 22 May and 22 June, how do I calculate interest?

I've prepaid council rates and water. Can I simply apportion those on a simple time basis?

 

[alexlee]

Basically, just apportion it by the number of days. All expenses (interest, council, etc) can be apportioned this way.

Incidentally, are you claiming another PPOR at the moment? If not the 6 year rule might apply. Of course if you don't plan on selling within 6 years it doesn't matter.
Alex

 

[cletus]

Basically, just apportion it by the number of days. All expenses (interest, council, etc) can be apportioned this way.

Incidentally, are you claiming another PPOR at the moment? If not the 6 year rule might apply. Of course if you don't plan on selling within 6 years it doesn't matter.
Alex

This house is my PPOR and I'm renting to maintain it that way because I want to live closer to the city (and I only need a smaller place) and I see this property as having much more medium term potential for capital growth because of its high land component.

The thing I'm tossing up at the moment is whether to declare the t/house I'm about to build as my new PPOR as that gives it CGT free status until its built as long as I move in (at which time my previous property loses PPOR status) but I don't think I"ll bother.

 

[dcarr]

Basically, just apportion it by the number of days. All expenses (interest, council, etc) can be apportioned this way.

Just thought I should clarify that the key word is "can" ... you don't have to do this kind of apportioning unless you would benefit in some tangible way.

Cash-basis accounting is much easier - just claim each revenue and payment in the actual period they happen. See : http://en.wikipedia.org/wiki/Accounting_methods

Whichever you choose, you do have to be consistent, and document any changeover thoroughly.

OOPS : I didn't read the post properly, it is the first period as an IP! So yes apportion any carryover expenses, then you can switch to cash-basis accounting.