Seen a few people here mentioning renting out thier PPOR and (Im guessing) renting somewhere else themselves. Why do this? I presume they would be renting somewhere else for the sam erent they would be recieving from thier PPOR and the advantage is that you mortgage now becomes tax deductable?
Phil_McRakin wrote:I presume they would be renting somewhere else for the sam erent they would be recieving from thier PPOR and the advantage is that you mortgage now becomes tax deductable?Precisely! But you then lose the CGT exemption, so you have to weigh up which tax benefit is more significant.
But you then lose the CGT exemption – Yes only after 6 years from the date you vacate.
Richard Taylor | Australia's leading private lender
So does this mean a family could effectively rent somewhere else while considering if they want to sell their PPOR into a Trust and then purchase a new PPOR thus turning their PPOR into investment property!
Most people probably do this for other than financial reasons – location closer to work etc.
But there may also be good financial reasons such as claiming negative gearing benefits on your home while paying cheaper rent. ie you may save a heap of tax for a few years and then be able to move back into your house and avoid CGT completely.
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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