i was just lazying in the bath eating goodygumdrop icecream and reading the people of interest stories in the last api - as one does - and started mind wandering as to where we go from here.
as most would know, hubby got a job transfer and we're now located in a smallish town - second largest city in south australia (which doesn't mean much).
the local property market is too expensive as they have just gone thru their boom over the last 6 months (however i will be looking at a block of 3 units this afternoon). i still like newcastle as a market area but it is not cheap and at the moment cashflow is holding us back. there is also the substaintial amount of losses we are carrying forward due to some bad decision making (read: great learning experiences) a few years back.
so i ventured - to the dark side of thoughts - currently we are renting (okay, so his work is paying the rent for 6 months) a very very nice 4bed/2bath 6mth old joint for almost half what our ppor is renting out for - and the 4/2 is really much to much house for us. anyhow, we are therefore using the ppor rent to rapidly pay off some debt over the next six months ... but i digress ...
this got me thinking - as long as we rent, our ppor remains our ppor for cg purposes for 6 years (then we move back in for a month and the 6 years starts again). as there are now only 3 people and 2 pets in the house (stepkids have moved in permanently with their mother due to us being 1000km away) we no longer need to live in a 5bed/3bath joint (even the 4/2 is too much) with expansive ocean views and large cg.
maybe there really is something in this renting for a couple of years stuff - as long as you also owned a "ppor" that was increasing in tax free cg and it rented out for higher than you were paying in rent.
so, what if it was taken a step further. what if the place you were renting was owned at arms length by yourself - via the trust that is holding the large losses - and obviously you have to pay market rent to the trust to keep it all above board.
and then what if the place you were renting needed a minor reno, and was subdividable? then you wouldn't be disturbing "tenants" to do the reno or subidivision. and what if the trust was to then build a second house on the block?
then you could either rent out the new house, move into the new house yourself to rent from the trust, or move out completely to rent or sell both - if sell then write off some off the losses and get tax fee $$ and repeat process.
probably to avoid disrupting the family to much i'd probably go down the "move into the new house and sell the old one" path.
all the while the ppor is going up in cg-free value and you are getting the extra income from it.
thoughts?
as most would know, hubby got a job transfer and we're now located in a smallish town - second largest city in south australia (which doesn't mean much).
the local property market is too expensive as they have just gone thru their boom over the last 6 months (however i will be looking at a block of 3 units this afternoon). i still like newcastle as a market area but it is not cheap and at the moment cashflow is holding us back. there is also the substaintial amount of losses we are carrying forward due to some bad decision making (read: great learning experiences) a few years back.
so i ventured - to the dark side of thoughts - currently we are renting (okay, so his work is paying the rent for 6 months) a very very nice 4bed/2bath 6mth old joint for almost half what our ppor is renting out for - and the 4/2 is really much to much house for us. anyhow, we are therefore using the ppor rent to rapidly pay off some debt over the next six months ... but i digress ...
this got me thinking - as long as we rent, our ppor remains our ppor for cg purposes for 6 years (then we move back in for a month and the 6 years starts again). as there are now only 3 people and 2 pets in the house (stepkids have moved in permanently with their mother due to us being 1000km away) we no longer need to live in a 5bed/3bath joint (even the 4/2 is too much) with expansive ocean views and large cg.
maybe there really is something in this renting for a couple of years stuff - as long as you also owned a "ppor" that was increasing in tax free cg and it rented out for higher than you were paying in rent.
so, what if it was taken a step further. what if the place you were renting was owned at arms length by yourself - via the trust that is holding the large losses - and obviously you have to pay market rent to the trust to keep it all above board.
and then what if the place you were renting needed a minor reno, and was subdividable? then you wouldn't be disturbing "tenants" to do the reno or subidivision. and what if the trust was to then build a second house on the block?
then you could either rent out the new house, move into the new house yourself to rent from the trust, or move out completely to rent or sell both - if sell then write off some off the losses and get tax fee $$ and repeat process.
probably to avoid disrupting the family to much i'd probably go down the "move into the new house and sell the old one" path.
all the while the ppor is going up in cg-free value and you are getting the extra income from it.
thoughts?
