Hi, new user here… have lurked for a while.
I am in the process of settling on my first property. Goal is to renovate front, subdivide and develop rear and rent both properties out, all going well of course. Property located in Western Australia.
I have purchased the property which is currently tenanted until about May 2013. To adhere the FHOG I must occupy the residence for 6 months, commencing withing the first 12 of ownership.
My question is regarding tax time. Because this property has been purchased under the FHOG, will I be exluded from any tax deductions usually associated with an investment? I understand the FHOG is meant to be only used with a property purchased for residence.
I feel the answer is that I will be excluded, but appreciate any help or direction I can find more information. Have tried searching the internet to no avail… if this is the kind of info I should be paying for, I apologize and understand if no information can be offered.
Appreciate any help,
Ryan
Hi Ryan,
Not across all of the ins and outs of FHOG but my understanding would be as follows:
The two issues should be looked at separately.
1. You must adhere to the FHOG and reading your plans it would seems as if you have plans to do so. The FHOG is administered at the state government.
2. The tax deductibility is a commonwealth matter and you are entitled to claim normal expenses associated with owning an investment property.
I do not see any issues with what you are proposing.
Thanks for the reply.
Definitely plan to adhere the FHOG, plan to carry out some renovations while living there anyway.
I was just wondering whether I should organize a depreciation schedule, etc for the 8 months or so it'll be tenanted.
My main confusion was as I was buying with a FHOG (not granted for investment properties) was would I be excluded, but I think you've answered. I'll really have to find an accountant I guess… I used an advocate and everything for this purchase… If its seen as an investment for the lease period, I might be able to claim a few things..
Thanks again
Hi Ryan,
I would organise a depreciation report (or at least speak to someone who can advise on the benefits you may achieve with a depreciation report.
You'll find any depreciation claims available to you will be apportioned over the period of time the property is tenanted. For example if the property is tenanted for 50% of the year then you'll be able to claim 50% of depreciation costs in that year..
While the property is tenanted you'll be able to claim all normal costs. Just make sure you know the difference between repairs and renovations as they are treated differently by the ATO.
Time to accountant up I think.
Thanks again for the reply!
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