hi folks,
i currently have one p.p.o.r. (p + i loan) and one investment unit on the gold coast. im considering moving out of my p.p.o.r. – reason being is that its a 3 bed house and i live by myself, it would rent for around 400-420 per week. i figure i could rent a unit with my girlfriend and share rent and pay around 200 a week rent myself. therefore i would end up around 180 dollars a week better off after management fees etc??….and thats before considering tax benefits. also i dont really like the location of my house, it doesnt suit my lifestyle.my question is….is it worth it? im assuming i would then open my p.p.o.r. up to CGT? how does that weigh up to the tax benefits? my ppor currently incurs about 1800-1900 per month in interest. Also are there any fees i would incur by changing the property from p.p.o.r. to investment? i have owned it for about 3 years.
another question. i replaced a "water damaged" benchtop in my investment property kitchen. i have the reciept etc from the replacement. is this ok to claim as repairs on my investment unit?
i apologise in advance for any of the above making no sense at all
many thanks
glennGlen,
to answer your last question first, if the replacement benchtop was 'like for like' eg laminex benchtop replaced water damaged lami benchtop (ie not lami to granite etc) then it would come down to the cost of the replacement item (due to the extended life).With regard to changing from PPOR to IP, you may need mortgagee consent (from the lender) but usually this is not an obstacle – possible small fee. If you are not claiming for another PPOR, I think that there is a 6 year allowance for you to be away from your house to be able to claim the CGT exemption (move back in for a short time every five-six years – see some of the other posts about that).
Moving to a rental unit then claiming the costs on the IP is probably a sound move (you can only claim the interest portion of the P+I loan, but you do pick up the other costs of council, water, insurance, mgmnt fees as deductions as well).
You can actually rent out your home for up to 6 years and still claim it as your main home with CGT exempt status and claim all costs at the same time. see s118-145 ITAA.
So doing that you would be saving money on the rent as well as getting some good tax deductions – and may not have to pay CGT.
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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