Hi guys,
Just about to buy a 3 bed property to live in for $490K, renting 2 rooms out for $360 per week. Strata/Council Water are approx $4000 per year.
The “rented part of the building ” would be making a loss
My question: Can I arrange to have the loan split into a 66% investment, 33% owner occupier loan, and then negatively gear 66% of the building costs (and depreciation etc) against my rental income mentioned above.This would be a good tax saving option so (1) Is it possible to do legally? (2) are there other knock on implications such as land tax liability and CGT down the road?
Thanks in advance for your help
G’day Padraicc,
I’m not totally sure, but in short, yes I think it is possible to do what you are suggesting.
However, if in the future you decide to sell, you will most probably be hit with Capital Gains Tax, due to the fact that the property will be deemed to be an investment, rather than your “home” which is not subject to CGT.
I am happy to be proven wrong…….
I would certainly investigate further before making you desicion either way.
Good luck,
BDM
Property + Music : what else is there ?
http://www.mattsmusic.com.au
http://www.rivertothesea.com
http://home.iprimus.com.au/mattandrobyn/index.htmNo need to split the loan.
Just claim 66% of the interest and other costs (electricity, rates, insurance etc).
Also add all the rent to your taxable income.
When you sell you will have to also pay CGT on 66% of any CG you make.
This is one reaon why people renting rooms often don’t declare it on their tax nor claim any negative gearing against it….
Not that I am suggesting you avoid your taxation obligations. Just that you need to be fully informed of the pros and cons before making such an investment decision.
Cheers,
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
thanks for your help folks, much appreciated. [biggrin]
When I do sell in a few years I will make sure to do it when I am leaving the country (so marginal rate lowest possible) and will also get the 50% reduction for holding it longer than 1 year
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