Hi all,
I am a first home buyer in Brisbane looking to purchase a unit but rent it out for the first 6 months before moving in myself.
I meet the FHOG criteria providing i move in within the first 12 months of buying the unit, my understanding is that the First Home Owners Grant is received around settlement?I just have enough deposit with my current savings but was wanting to put the $7000 FHOG in an offset account to be able to use for savings / emergencies but paying down the homeloan interest at the same time. I also wish to rent it out for 6 months so I can continue saving for a little longer.
Can anyone confirm if this can be done and as I wish to move in 6 months after purchase will I receive this $7000 grant straight away / or at settlement? Also will this have any stamp duty, tax or capital gain implications etc?
Many thanks
You should be able to get the bank to process the FHOG for you so that it is available at settlement.
If you don't move into your property straight away it will be subject to CGT. You will get a partial exemption based on the non-main residence days/ days owned x CG or CL.
eg. If you sell within 12 months then half of the gain would be assessed.
if you sell after 3 years then 0.5/6 x CG will be assesed
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,
I would be looking at renting it out for the first 6 months then living in the unit for at least 18 months before looking to use it as an investment or move on etc.
I have been informed that the rent will be approx $250/week which is similar to the mortgage repayments. I am a novice, but from my research i believe i can claim tax benefits on council rates etc and possibly a small portion of body corporate (body corp almost $60/week) for the rental period.
Ideally if you could move into initially you could then move out and claim it as your main residence and maintain it CGT exempt under the absence from main residence rules. But you cannot claim it as a main residence until you actually live in it first.
Once it is rented you could claim all expenses associated with the property including interest, full body coporate, borrowing costs (over 5 years) and depreciation etc.
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 t23
I can see 2 issues.
You wont get the First Home Buyers Stamp Duty concession so will need to ensure your existing savings can cover that as you will be assessed at the investment rate and
Secondly the FHOG will not be available at Settlement but you will need to lodge it once you satisfy the residency conditions.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Thanks for your input guys, much appreciated.
Seems my dilemma is:
1) if i rent out from the start for 6 months then move in, i will still get FHOG but have to pay over $3000 stamp duty.
2) But if I move in straight after purchase the $3000+ stamp duty will not apply.Hmm may have to save the pennies for few more months so can move straight in and not forfeit the $3000+ stamp duty savings.
thanks again
mr T
Mr T.
What do you mean by point 2?
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
I am also lost.
Stamp Duty if purchased as an investment property will be a lot more than $3K (Try nearer $9K on a $300K investment property).
I just cant see why you would do it that way around.
If you claim it as your prime residence initially and then decide to rent it out you can still have your cake and eat it.
All of your expenses become deductible the day the property becomes available for rent and this included BC Contributions, Council rates, Insurance, Borrowing costs (propertional over 5 years or the term of the loan) etc etc.
You would just go Interest only with 100% offset account.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Sorry guys,
What I was referring to with the stamp duty… from what I have read and Stamp Duty calculators i have used on the web (eg MortgageChoice and LoanMarket's calculators), there is no stamp duty for First Home Owners in QLD if it is PPOR but if the unit starts out as an investment the Stamp duty jumps up to over $3000 (bare in mind the unit is worth approx $160k).
I was hoping to rent out for first 6 months so I could keep saving a little more coin but believe the best option would be to move in straight away so I cash in on all the FHOG incentives, no stamp duty etc etc
Thanks
Move in for a while and then rent it. Benefit could include:
– less stamp duty
– FHOG
– CGT exemption
– All the income tax deductions too (after renting)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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