Hi All,
I'm planning to buy a property and live in it for 1 year to get the FHBG and after 1 year I intend to rent it out.
My questions are:
1. When buying first home is it possible to declare it as a IP as soon as it's rented out on tax form?
2. As soon as the property is rented out can I claim on:
a) Interest paid (regardless whether it'd be a PI loan or I only loan)? if yes, what proportion of interest paid is generally claimed back?
b) building depreciation allowance (assuming it was constructed at 1987)?3. Also would it be advisable for me (first home buyer) to take out a interest only loan for my particular plan? I believe that you pay more interest this way and that you have to pay lum sum of the property value at the end of the term? i.e. if I take a loan of 200K for 10 years term, I'll have to pay 200K at the end of 10 years?
I aplologise if this has been answered
CHeers,
Ken1. The property becomes an "investment property" (just a name) from the moment you use it to produce an income.
Maybe for example you let a part of it to someone else say a room or downstairs or whatever and you produce an income from that. They pay you money.
When you move out of a property and tenant it and receive rent then you are producing an income from the property.
The answer is more related to when you first use the property to produce an income and not so much about now its an "investment property" cause it is scenario.
I guess this is really relevant when you are looking at doing your returns for a given period. At that time you would focus on the first used to produce income as a key date for determining the deductibility items you mention.
2. I'm just providing a very broad answer here, each individual circumstances vary and so on and on……the deductibility of interest payments on an IP isn't as straight forward as it seems. Essentially if funds are borrowed principally to finance the purchase of a property used to produce income there maybe some deductible aspects of the interest payments. (very cautious).
At the end of the day your best bet is to find an accountant who owns an investment property themselves.
Have a look at some of the mortgage responses for previous answers relating to deductibility.
Interest only loans the same thing there has been plenty of comments given in relation to this also. I would not consider interest only on your principal place of residence as a good starting point for building a portfolio. One reason being you would probably like to start building some equity and demonstrating your ability to meet the loan. But that's my view of what I would not do.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
