Forum Replies Created
Hi AnthonyB.
That is some really good advice thank you so much. So say for instance the bathroom ceiling needs some painting because of mould or water damage, if the invoice specifies repainting due to water damage or mould can that be claimed as an immediate repair or is it still depreciation?
I know with the CBA at least they have two seperate loan categories which are personal loan and renovation loan on investment property.
Thanx Catalyst. So they allow double dipping. Sounds good to me.
Catalyst you are mighty awesome. Thanks for your help money like that is really not worth worrying about in this grand scheme of things.
And I happen to be a massive fan of Doctor Doom from Marvel Comics however now that you've pointed it out I'm beginning to think it's not suitable for this website.
Thanks for the tips. One last thing, say you buy it tenanted and apply for the loan during tenancy then vacate the property and do reno's. What you guys think of that.
Thanks guys. Yeah that is a major bitch. So the real dodge thing to do is put it up for lease unrenovated for an overly inflated amount for lets say 2 weeks, then take the loan, start reno's and take it off the market?
Yeah I know all those things. Basically as far as I know they can get a loan for to buy into a property however it has to all be under the one bank so that gives the bank security. At the moment I haven't worked out any plans for if one party goes bankrupt but I am aware of the risk. This has nothing to do with spousal or marital issues, it's really more of getting an additional investor.
It might be similar for instance if you have a succesfuly growing business which has grown significantly in value, you find an investor to give you a large sum of money for a share and they become a partner so now you have some money to invest otherwise while still being the primary business owner.
Hi Terryw.
So lets say you buy a unit vacant, take a loan and renovate for 3 months then put it up on the market then you can claim back only from when you put it up for lease?Yeah that's exactly what I reckon. What the hell is this about having to lease it prior to vacating tenants and renovating, I am definitly getting a second thought.
No I mean I want to buy a vacant unit and renovate it with borrowed money, then lease it and claim the interest.
Yeah Catalyst is rite.
I was a property manager for 5 years and I saw a couple of the following cases.
One strata company installed individual water meters for each unit.
One landlord owned a duplex with a single meter and had a second one installed,
There were 4 townhouses each individually metered but for some reason sydney water didn't individualise the meter reading despite the meter right outside the front door.Anyway if you want the tenants to pay water usage it needs to be specified on the lease and as Catalyst said, check the rules on water use such as water saving taps.
Hi Bjsaust.
Thank you very much for your reply. Yes my main concern is the interest on loan, I am familiar with the repair and renovation deductions on immediate and depreciation.
Here's the thing, with CBA if I were to borrow $50,000 for renovations that works out to a bit over an extra $300 per month, therefore $3,000+ at the end of the year. My initial plan was to buy vacant, renovate and lease but now what my accountant's saying is you can't claim either depreciation or renovation loan interest unless it's tenanted prior to improvement.
I currently own a one bedroom apartment for a little over a year and I bought that as a FHB so it was my PPOR for 10 months. I renovated it immediately after purchase for about $15,000 and leased it newly renovated and furnished with $5,000 worth of furniture. I understand that I can't claim depreciation on the $20,000 of furniture and reno's because I did all of that as the occupier but I'm not liking what my account said because it holds you back from renovating for at least 3 months. I'll ask around get a second opinion
Yes that you did, but thank you for the consideration.
Ok I see. Well thank you for clearing up that second point about the loan Richard. It's not as simple as one party having one mortgage while the other party has a loan from a different provider.
Much appreciated.
Thank you for the feedback. The way this is meant to work is as follows:
You buy an apartment worth $600k in a company name.
Renovate it to make it worth $700k then once it's leased for a higher rent sell a share of the property value, we'll say $200k/21% to a low end investor.
This way they take out a loan seperately for themselves and you end up with $200k cash from the bank (minus tax ofcourse) and you're only earning 79% of the rent.
Then you have the extra $200k that you can either put against your mortgage or into your next investment.
If you put it into another investment, even though you'll be paying the same mortgage as before you can claim a higher tax deduction and a lower taxable income.Anyway that's my idea and method of thinking. Keen to hear your thoughts.
Here's what I was thinking. Say you buy a unit for $600,000 then you renovate it to up its value to $700,000. After this lets you decide to sell a percentage of the property to an investor say $200,000.
I was primarily concerned about how does the bank treat this in terms of providing a loan to an investor for partial ownership and does this incur stamp duty?
