Hello Mel

The best way to answer your question for yourself is to do the maths.

Firstly find out what you could rent your unit out for.
Then you can either work out the outgoings ( council rates, water, house insurance, landlords insurance and expected maintenance costs)  or just use 20% of the rent as an estimate.

Rental income – expenses – interest on mortgage – depreciation = loss on property 

Depreciation is the tricky bit and depends on the age of the unit. Maybe someone else can help if you post the age of the unit. If it's over 40 years old I think you can pretty much discount the depreciation for the purpose of this exercise.

By deducting this loss from your other income you can work out how much tax you will save. Don't forget if you own the property 50/50 with your partner then each of you need to declare half the loss.

Compare this saving against what you would be paying in rent and you will see if it's worth your while.
Remember to consider non cash things like tenants never look after your property as well as you will and having to give up the emotional security of living in your own place.
  
You can rent out the unit for up to 6 years without effecting its CGT free status.

Hope this helps
Elka

Hello Mrleumy

I think there are several problems with this idea not the least being that when you transfer the property into the trust you will have to pay stamp duty again, which is an expensive exercise.

Some other problems are:-

If the property is negatively geared the losses will be trapped in the trust.

You lose the advantage of the 6 year rule of being able to rent out your PPOR for up to 6 years without spoiling it's CGT free status. ( Note this only applies if you did not rent out the property before it became your PPOR )

I can't see any advantage of moving this first property into a trust and certainly not so quickly.

If you search this site you will find many posts from people discussing taking advantage of the FHOG and then renting out. Most plan to do some renovations to add capital and rental value while they are living there.

Hope this helps
Elka

Thank you Terry.
I wasn't aware of that. I thought you actually had to have income.
Good to know

If it's easy for you to find the case that would be great.

Cheers
Elka

Hope this helps
Elka

Using the 6 year rule you are allowed to rent out your PPOR for up to 6 years without affecting it's CGT free status.

So, if you sell after renting it out for 2/3 years and have no other property that you want to treat as your PPOR you should have no CGT to pay.  

Cheers
Elka  

Hello 93561

Have I understood you correctly.

During the approximately 84 days you have been able to occupy the unit ( 42 days to settlement and 3 x 14 days extensions ) you will have been able to live rent free and loan interest free for 39 days ( thanks to your good negotiation of the terms of the last extension naturally ) and you're not happy ?

Actually your vendor sounds neither nice nor fair but you will be rid of him soon.

Let us know when you've finally settled.

Good luck
Elka 

Hello dotoh

Actually your situation is pretty much the same as that described by KIZ in the post above except your numbers are different.

BTW the two items you described as maintenance are in fact not fully tax deductible as repairs. They are both capital expenses and you will only be able to depreciate them while the place is a rental. Also when you sell the property this depreciation will be taken into account for the purpose of working out the capital gain. 

In the scenario you describe, if you expect to make a substantial capital gain you may find that the CGT you will pay will far outweigh any benefit of being able to deduct interest and repairs in the first year.

If you were to genuinly live in the property as your PPOR for the first 3 months you would avoid all CGT problems.     

If I were you I would go to an accountant and get some advice about this before I signed any contracts.

Cheers
Elka

Hello Daniel

Have you and your parents discussed this with an accountant versed in estate planning to make sure this is a good idea?

To my thinking, if your parents gift you the house while alive you will have to pay at least stamp duty on the transfer which won't happen if you inherit. It depends on the state you are in but this could be +/- $20K 
 
Also, unless you are planning to use it as your PPOR as well, the property will start to attract CGT from the date you become the owner. If it remains your parents property it will continue to be CGT free until you inherit.  

While the impluse from your parents is really nice, financially it may be better to do it differently unless there is another overriding reason to do the transfer now.
 
Best to get some advice first.

Cheers
Elka

Hello skuz

I wouldn't be too sure of that.  True story.
 
Without going into great details the basic facts are that my girl friends husband thought he was being careful ( and clever ) when he accepted about 30,000 euros in gold bars ( marked as issued by a Swiss bank ) . He had 6 of them ( randomly chosen by him from a suitcase full of bars ) cut in half and tested professionally while everyone waited, watching the suitcase.

After the deal was concluded and the people had left the only real gold bars were the 6 that he had had tested. The rest were just gilded.

As I told him when I tried to disuade him from entering into this "profitible" transaction, if the bars were real and also not stolen then they could be sold in any bank.

An expensive lesson.   
Elka

Hello neilvs

You seem to forget that not all the rent is availible to service a mortgage.
Generally 20% is already earmarked for expenses, excluding interest payments.
Council rates, water rates, insurance, repairs, agents commission/letting expenses, vacancy periods and possibly land tax also neeed to be paid. 

I guess the banks realise this.

Cheers
Elka