Hi all,
I’m thinking about renting my home (Syd) of which I owe the bank 200K for about $300p/week and rent a cheaper place for around 250 p/w. Then claim a tax deduction on the interest I’m paying on my home loan (270p/w).
Is this something other people are doing?
it seems the numbers stuck up, I am missing something?[
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LeoLeonor,
I have done exactly the same thing.Rented out initial PPOR for $350 per week, and rented around the corner for $225.
Also changed loan to interest only. Although, I was going to make a profit, however, with a tax depreciation schedule, allowed me to negative gear.
I did it specifically because it placed me in a better position for future finance and reduced my outgoings overall.
James
great! why didn’t somebody tell me about this before??
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LeoHi Leonor,
Hold your horses! Before embarking on such a journey you need to analyse the whole picture.
Yes, you get short term gains associated with making your PPOR an investment property but your PPOR is exempt from CGT – and as such your long term aims and aspirations will really determine what is the best course of action.
I could well be that converting your PPOR to an investment property is the best option but then again…….maybe it isn’t.
The message really is work out what you want to do in the long term first – and then take the actions that will enable you to achieve your goals.
Derek
Also remember that you get a 6 year exemption from CGT if you do not make another place your PPOR in that time.
So you can have the best of both worlds.[^]
Cheers
MelLeo,
For me, my long term strategy, is to be buying 2-3 properties per year. I don’t intend to have a PPOR and will continue to rent in the ensuing years. It is an aggressive property acquisition strategy for medium to long term.In my scenario, I will have to 27/1/2010 to determine whether I sell my old PPOR (and as long as I have not claimed another PPOR), then I can sell it CGT free.
James
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