Forum Replies Created
Hi Terry,
If he moves out of his home (PPOR), and rents it, then it becomes an investment for tax purposes. If he has moved into a new home he has bought, then this new home is his PPOR, and the old home becomes an investment property.
The character of a property can change, and is dependent on what the owner/s are doing with the property.
When you say the rent is 'cash', is it declared on a tax return? Can you show a tax return that verifies the income you are receiving from the first IP.
If the rent can't be proved, it doesn't exist.
We are with CBA, and, as Banker said, they just divided the monthly payment by 2 to calculate our fortnightly repayment.
It doesn't worry us as we will be effectively paying 13 months a year instead of 12, and paying it off quicker.
Hi Vinny,
When you refinanced, what did you use the funds for? If it was related to the property (improvements, repairs etc) then you can claim that portion of interest. If not, then you can't.
If none of the refinanced funds were relted to the property, then your interest is only claimable on the original $190k borrowed.
Your capital gain would be calculated as (Selling price less associated costs) – (Cost price plus purchasing costs)
Selling costs include your agents fees, and purchasing costs include stamp duty, transfer costs etc.
<font color=”#000000″>Trusts are not eligible to receive the main residence exemption for a principal place of residence, so there would be CGT payable if the house was owned by the family trust.
Secondly, how would the house be split after your death? Who would be the trustee of the trust? What if one child wants to sell and another doesn't? How would these questions be resolved? </font>
Hi Nit,
To answer question 1, I would say both. House insurance to protect the house, and landlord insurance to protect for loss of rent, damage etc. Landlord insurance is not expensive, and well worth the peace of mind. Especially if you will be a long way away from the property.
I think some agents will handle the rates, water rates etc for you. You'll have to check with your agent.
As for the mortgage statements, most banks now offer electronic statements. it may be easier to download the statements from the banks web site.
terryod wrote:I have a similar question, a friend of mine moved out of his principal place of residence and moved into a new house. He has been negative gearing the first property since moving out. I said this is not right and he maybget hit by the ATO if he gets audited. Can som on let me know what the go is here?It depends on what interest he is deducting. If he is deducting interest on borrowed funds that were used to by his new residence, then he is not claiming the interest correctly.
He can only claim the interest on funds originally used to buy the first property. The security offerred is irrelevant.
Mr5o1 wrote:Secondly, If you chose not to extend the main residence exemption, then provided that you moved into the house as soon as practically possible after you bought it, (and a few other things) the "home first used to produce income rule" would allow you to use the market value of the property at the time you moved out as the cost base for your capital gain tax – so you would not pay CGT on the appreciation in value whilst you lived there. (make sure your accountant does not do a pro-rata calculation!!!)
more info here: http://www.ato.gov.au/individuals/content.asp?doc=/content/36910.htm&page=3&H3If you have to pay CGT (say you bought interstate), make sure your accountant does BOTH calculations and chooses the best one. Sometimes the pro-rata calculation gives a better result. (If the house has had a sharp increase in recent years, for example).
sumnerstephen wrote:We've recently moved interstate and out of our PPOR, which is now tenanted. We are considering selling the property to re-invest. Does anyone know if we will incur CGT for the sale of this property now that is is considered an investment. It will have been 12 months in the next couple of weeks.Any comments appreciated.
Are you currently renting interstate, or have you bought to live in? If you have rented, then you should be able to sell CGT free, assuming;-
1) You lived in your PPOR straight after settlement, and before you rented it.
2) It has been less than 6 years since you moved out and rented it out.
3) You are not claiming the PPOR exemption for another house (ie, you are renting interstate.It may have been Steve Keen. He's constantly telling people he predicted the GFC.
Do you mean as a beneficiary? Yes you can, as long as the deed allows it. It will usually allow parents, spouse, kids etc of the primary beneficiary. Just make sure that the deed does not disallow distributions to non-residents. (I don't think it's a common clause, but best to be on the safe side).
You may need to check with the FIRB as to whether your father can be a trustee of the trust. I would think that if you are both trustees, then this would be ok, but it's just my gut feel. You'll need to check this out.
Another thing to consider is that any distributions made to non-residents triggers a withholding tax.
It won't effect the deductibility. Interest deductibilty is determined by what the funds were originally used for.
If you take out one loan of $225,000, only the portion related to the purchase of the investment unit ($105,000) would be deductible. ie, 46.7% of your interest on the new loan would be deductible.
Phorsha wrote:Kevin gives with one hand and takes with the other, I hope most aussies will see this and think wisely before re-electing him come election day.But don't all governments? Rudd has hit business with the 3% increase in super contributions, rather than having the employee salary sacrifice the 3%, because he thinks that the small business owners don't vote for him anyway.
It's just the same as Howard ripping billions out of education, or his work place changes. He probably thought that uni students and academic staff didn't vote for him, so it wouldn't hurt him. (And it didn't, people re-elected him 3 times.)
I personally htink when people have a serious think about "Prime Minister Abbott", they will re-elect the current government. Abbott is Latham with big ears.
HI there,
I just sent you a recommendation by private message.
Its a good question. I'll have to do some checking.
When claiming depreciation and then selling, the issue is that the sale of the depreciated assets is treated differently to the sale of the CGT asset. Say you depreciate the oven and carpets. When the house is sold, the depreciation claimed on the oven and carpets is 'recouped', and not subject to the CGT discount.
As the sale would be CGT free, in your case, the question is whether the recouped depreciation is assessable, and what value to put on the depreciated assets?
Hi Sasha,
I think it's important to keep the rising interest rates in context. Mortgage rates are still (just) below average, and are still about 2% lower than they were in August 2008, less than 2 years ago.
From the RBA's announcement, it seems as though this may be the last rise for a while as the cash rate is getting back towards average rates.
Hi Anita,
Yes, the interest on money borrowed for capital improvements will be deductible.
The capital improvements will have to be depreciated, rather than written off, much like you would depreciate a new stove or dishwasher.
Malcolm Turnbull has stated that the govt have taken up 2.5 of the 138 recommendations. (Although, I'm not sure how you can take up half of a recommendation)
Added to that, the lift in the super guarantee WAS NOT a recommendation of the Henry Review.
It was a fizzer, really. Many of the Henry recommendations have not been taken up, and have been ruled out 'for ever'. (Just like the GST!)
There were no changes to negative gearing, capital gains discount, and there was no 'tax free bank accounts', which had been proposed.
The only new thing is the 40% mining tax, which basically replaces the royalty system currently in place. The miners are squeeling, but it isn't as bad as they thought it would be. Some small miners who are not yet profitable will in fact be better off.
Everything else was just tinkering with programs or taxes that are already in place, such as reducing company tax rate, increasing super guarantee and increasing asset write-off threshold for small business.
A bit of a let-down, really, but what did we expect in an election year!
nitrodrops wrote:Thnx Dan,One question, cant i use cash to top up the 70%-80% LVR?
Cheers
NitYes, you can contribute cash to the superfund, provided it doesn't exceed the prescribed limits.
