Hi,
I am new to property investing and I am looking to purchase a property that will be an investment with the view to purchase another one when I have enough equity. I am not sure whether to apply for the First Home Owners Grant/loan or an Investment loan from a tax perspective and also to fund future investment properties.
Background Info:
I am eligible for the First Home Owners Grant which will entitle me to approx $16 500 savings (exempt from stamp duty and they give you $7000 cash towards the home loan). Obtaining the grant means that the property is my Principle Place of Residence (PPOR) and I would have to live in it for 6 months meaning I would have no rental income for 6 months (around $7 800- at $300 p/w rent). This would still give me a benefit of $9500 even if I didn’t have a rental income for 6 months. However if a property is my Principal Place of Residence are there certain items that are non tax-deductible and therefore would not be ideal if I were to rent it out?
I would like to establish:
1. Whether it is possible for me to borrow as a first home buyer and then rent it out after occupying it for 6 months?
2. If not can you change loans over to an investment loan?
Any other advice on financing and tax?
Cheers
Hi KH85
Welcome to the forum.
Purchasing the property as a PPOR can be beneficial given the concessions available (as you already know).
In terms of whether the bank will lend to you on the basis of it being a PPOR or an IP will depend on your borrowing capacity. A decent broker will be able to look into your situation and advise accordingly.
If you do purchase as a PPOR and intend to convert it into an IP after 6 months, then it's important you structure the loan correctly from the start.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Another advantage of moving in initially is that the property could be CGT free even while you rent it out later and still enable you to claim all the usual expenses.
You may also be able to take in a boarder during the period it is your main residence to help with expenses.
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 KH85,
I'm also new to the forum, think I may be able to help a bit.
What state are you in KH85? Here in NSW FHOG has now changed, unless its a newly built or 'off the plan' home, the stamp duty exemption is no longer available.
But the helping bit I mentioned,
1. I did exactly what you are talking about, Purchased my first property using FHOG in 2008, Lived in it for 6 months (during which time I also rented two of the rooms out to boarders) then started renting it out.
2. I'm not so sure about the loan situation, I had my loan changed to interest only on the basis that I was moving overseas and the property would be a rental. Not sure if this loan setup was the most efficient but it seems to be working well, property is positively geared.
Using the '6 year rule' you are able to rent the place out and avoid CGT on future sale, a few rules involved.
I have been able to claim depreciation, Interest, loan costs etc as per a normal Investment Property.
Hope this helps
Cheers
Wilba84
You must be logged in to reply to this topic. If you don't have an account, you can register here.
