Hi there
First of all let me say that I find your forum extremely addictive, I look forward to each new post on a daily basis. I am a real novice with Investing, however I have a lot of experience as a successful sales manager working as an employee for someone else. For everyone who has read Cashflow Quandrant, I'm really challenging myself to spend more time on the right hand side! I am now planning my steps.
I would love to hear any thoughts you may have on renting out my entire shed space (not attached to house) to potential commercial or residential prospects. Our shed has approximately 42 sq m of space & is very secure, it resides on our current PPOR which is on a 790 sq m block in Brisbane Qld. Does this make any investing sense? I am trying to think differently while utilising the current tools I have already at my disposal. I know how hard & costly it is for small businesses requiring warehousing for storage / distribution & I believe this concept may work as a Win/Win opportunity. Of course a lot of finer details are involved, however I would really like your honest feedback on the concept & feasibility.
Q Has anyone done this before?
Q If so what were the pro's & con's
Q Would you do it again
Q What would you do differently?Thank you in advance
MorgoOne potential problem is that you will probably lose the CGT exemption on the part of the property you are renting out. It may give you a bit of income now but may cost a lot more in CG when you sell – then again it may not as it will depend on how fast values are increasing.
You may also have issues with your insurance so make sure you tell your insurer in writing. They may even bump up the premium a bit.
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
Hi Terryw,
Thank you for your response. We live in this property and currently have a P&I loan with LVR 85%. Should we restructure our loan or any part thereof to better accomodate for renting the shed space? Perhalps in a family trust which I realise has cost implications (and benefits long term)? please note we would be utilising the rest of the premisies for residential use.
Hi Morgo
I don't think you fully realise the implications. This is your home and is on one title, so renting out a part of it would mean you will probably pay CGT when its sold – where normally it would be exempt.
Since it is one title you can't really do anything with the loans.
And there is not much you can do with a trust as to transfer the home would cost stamp duty and you would then have totally lose the CGT emeption on the property.
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
Thanks Terryw, exactly the sort of feedback I was looking for (not hoping for). Really appreciate the heads up!
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