Hi, stumbled accross this board after a few years away from owning an IP after a bad tenant turned me right off ever owning another one.
Atm, i am looking at buying a two story brick home where underneath is a solid room the size of the 3 bed house upstairs.
I am a tradesperson and converting this area into a 2bed unit is easy for me due to good layout etc. I would like to convert this to live in, whist aquiring rent for the house upstairs.
My question is while appling for the loan, they asked me whether it is OO or an IP. I cannot get the FHG due to my previous ownership of property prior to 2000.
What would be better to apply for?
I would like to claim interest off loan etc etc, but as i live there, could i?
Also if i applied as a OO, then in 6months did the above, could i start claiming expenses as an IP?Sorry bout the long drawn out question, but this is bothering me. I like the fact i can cut Stamp duty in half by going OO.
Please help, thanks.
BTW im in QLD if it makes any difference.My question
There are few solutions for your challenge but you need to understand the implication of each one. The loan structure should be determined after you choose the way you want to go about the property (you might want to chat to your accountant), one of the things that you need to understand is if you use part of your home for investment purposes and claim the interest you will need to declare the income as well, in addition to that when you sell the property you will be exposed to CGT on the portion you claimed, so depending on what exactly you wish to do, we can work out a solution that will best suite you. If you wish to discuss it further you can call me direct on 0438 985 708.
You can claim the interest on your loan that directly applies to the earning of income i.e. if you use 1/3 as office space or workshop then you can claim 1/3 interest.
BUT BEWARE – as is rightly pointed out above, you will open yourself up to Capital Gains Tax if you claim any of your interest. This applies, obviously, if you sell the property however it can be hefty so I would weigh up the pros and cons dependent on your intention for the property.
Hope this helps.
Megan
http://www.propertyhub.net
Your Investing and Developing Information Hub.When you apply for the loan you are supposed to declare if you will be using 50% or more of the funds for investment puposes. This determines whether or not the Consumer Credit Code applies. If it does, then you may have a few more rights.
This has nothing to do with the claiming of interest. Many people declare one thing and then change their minds soon after. From a taxation point of view it would not matter (check this with your accountant).
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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