Hello everyone, I need a little help.
My partner and I are looking for our first property to invest in. We have found one that we would like to purchase. We want to rent it out for a year to 18 months and then move in ourselves when we are married. Now i have some questions-
How does the tax implications work for this?
Are we able to claim deducitons and so forth even though we will be moving in later down the track?Here in QLD we have two different stamp duty’s that differ for the purpose of investing/ppor, which one would we pay?
What about capital gains? Will we be taxed on this once we live in it and decide to move later down the track?
Or is it wiser just to buy this as a rental and keep it that way and then buy another house when we are ready to move in?
If you can offer some advice it would be greatly appreciated.
Ian
Ian,
Yes, you can claim all the relevant deductions, even if you plan to move in later down the track for the period of the property being an IP. ie interest, rates, depreciation etc.
You would however not be eligible for reduced home owners stamp duty concession in QLD. Not sure if you already own a property currently, and therefore eligible for the Fed Gov’t FHOG (?)
If you then decide to move into the property and later sell, you would be liable for the CGT for the proportionate time that you have rented the property out for,
Example –
18 months RENTED
24 months LIVE IN AS PPOR
Capital Gain $50,000Capital gain is 50% of $50,000 x (18/42) = $10,714
Depending on what your plans are to acquire property ie aggressive or more cautious, another option for you is to purchase as PPOR, become eligible for FHOG/ Stamp Duty Concession, which means you need to live in the property for at least 12 months to retain those benefits.
Then you could rent out afterwards, hopefully with some capital gain & savings be able to purchase another IP or PPOR.
If you choose to rent afterwards again (and not to purchase another PPOR), due to the 6 year rule, you will be able to maintain your first purchase and sell, within those 6 years, CGT free.
James
Thanks James for the reply. Appreciate your help.
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