All Topics / Help Needed! / Tax deductions applicable on owner occupied property if rented out for first 8 months

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  • Profile photo of sam74sam74
    Member
    @sam74
    Join Date: 2009
    Post Count: 2
    May 5, 2009 - 6:15 am

    Hi all and thank you in advance to everyone  in assisting me. I have bought a property as owner occuppied in brisbane for 439K amount of loan is 407K (PI) on the 1 st may.The propery is leased out till september  09 and the rent I am getting is $300 p.w. and my repayments are $550 + rates p.w. Can I apply for tax deductions on this property till I move in september.
    any advise or directions would be appreciated.
    sam

    Profile photo of ducksterduckster
    Participant
    @duckster
    Join Date: 2004
    Post Count: 1,674
    May 5, 2009 - 10:06 am

    Yes
    You have to proportion your expenses
    number of days 1st of may to 30 june 09 (if rented from 1st may)
    divided by 366
    multiplied by expenses incurred

    So number of days after 1/7/09 to september 09
    divided by 366
    multiplied by expenses incurred

    see http://www.ato.gov.au/content/downloads/IND00133187n17290608.pdf

    However if you got first home buyer grant you can’t rent property out for 1st 6 months as you have to live in it !
    So if you declare income and expenses you can expect to pay back FHOG.

    If you move back into house you need to get a valuation done to protect you from capital gains tax liability in the future as the valuation is proof your house changed from investment to
    Main residence at x value amount in year 2009.
    This is because if you claim expenses against rent you incur capital gains tax if the value goes up on the house, if you do not get valuation done you may sell in ten years time and have to prove which capital gain was exempt as a Main residence from September 09.

    Profile photo of sam74sam74
    Member
    @sam74
    Join Date: 2009
    Post Count: 2
    May 5, 2009 - 10:11 am

    Thank you Duckster for your comments. I sincerely appreciate your time. I am very new to this would you recommend me getting an advise from a tax consultant or financial planner?

    Also would like to add to my scenario that I did not get FHOG as I had a 2 bedroom unit which I bought last year and currently reside in. When I was buying the new place  the FB told me to make my unit as investment property  and the house as Owner occupied .

    Which I duly did but didn't realise that the house had a lease agreement  till September 09 and the people who are living in there are quite nice and desperate to stay there till there divorce sought out etc etc.

    So am I still eligible to claim the interest paid on the mortgage less the rental income on this owner occupied till September 09?

    Regards
    sam 

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