Hello Joseph12

Yes you can but there will be CGT ramifications when you sell. You have to work out whether it's worth it in the long run.

http://www.ato.gov.au/individuals/content.asp?doc=/content/36910.htm&pc=001/002/026/017/005&mnu=5060&mfp=001&st=&cy=1

Hope this helps
Elka

Hello DraconisV

My understanding is that if you first rent out your place and then make it your PPOR, when you rent it out again you will not be able to use the 6 year rule re CGT. 

Please check this with a good accountant but if I'm right it would be better for you to live in the unit for the first 6 months ( 12 months in some states ? ) and then rent it out.

Cheers
Elka

Hello dublin_101

In your calculations I think you may have forgotten to use the 50% discount to CGT because you've held the property for longer than 12 months. 

Cheers
Elka

Hello eddiec

I tried to find the sections you mentioned on the ATO site but got totally lost.
Because of this I don't know if the situation changes for jc1979 if he is deemed to be a non resident for tax purposes.

Does he still have to declare the income he earns in his country of residence (UK)  to offset against his Australian losses?

Just out of interest.
Elka

Hello jpn251177

As Terry said, this is a complex area because it is not only dependent on Australian tax law but also on the tax law of the country you will be living in and whether the two countries have a double tax agreement. Being England I would be very surprised if there wasn't such an agreement. 

However, Terrys' answer as to what your obligations in Australia are is correct.
You will need to submit an Australian tax return each year reporting your rental income and expenses. The loss you will be making can be carried forward to be offset against future profits but I am not sure for how long. Your accountant should be able to answer this or simply ring the ATO and ask.

I'm an expat living in Europe but my properties make a small net profit. I am currently negating this by contributing to a super scheme. Something for you to consider when your property turns CF+

I have to report this rental income on my tax return here but don't need to pay tax on it because Belgium has a double tax agreement with Australia. The only thing they take their cut of is interest and share dividends. The latter is very painful for fully franked dividends.

If you're into shares it may be of interest to you to know that you don't need to pay CGT in Australia on CGs on shares. Whether England will tax you on this is something to check in England.

I assume you know that you can rent out your PPOR for up to 6 years without damaging it's CGT free status but if you intend to stay in England for longer than don't forget to have the unit valued just before the 6 years expire.

I hope this is of some help.

Elka 

Hello kev008

Understand your frustration but sometimes the best but hardest thing to do is wait.
As far as buying your first IP, in my opinion, this is just such a time.
 
In the mean time keep saving and researching. I notice from one of your other posts that you are in Melbourne. There is a networking group you may wish to join who meet ones a month.

https://www.propertyinvesting.com/forums/property-investing/general-property/4325982?highlight=meetings 

After reading what I assume was your first post I think you are on the right track. In fact you are about to have your first IP…….. with the added advantage that until you buy your new PPOR it will stay CGT free for up to 6 years

https://www.propertyinvesting.com/forums/community/opinionated/4325956

You may like to change the loan on your unit to IO with 100% offset account. This will have the same effect as paying down the loan but leave you with the option of using the savings in the offset account to buy your new PPOR while maximising the tax deductible interest on your current unit should you decide to keep it as an IP. 

Hope this helps
Elka

More reading for you. 

http://www.ato.gov.au/taxprofessionals/content.asp?doc=/Content/64045.htm 

Hello ankitjain

Your current tax agent is not adequate for your needs. You need to go to an international accountant for advice before you do anything else. Someone like KPMG  or maybe someone who you know also has offices in India. Leaving Australia with no intention of returning can trigger a CG event which would be a pity as you will then miss out on up to 6 years of CGT free growth on your home and may also need to pay CGT before you leave. You need advice.

Here is a general description of what/why double tax agreements

http://en.wikipedia.org/wiki/Tax_treaty 

However each agreement can be different so you need advice on the specific agreement between Australia and India.

It's a great pity that your home had been paid off and that the current mortgage is to be used to buy property in India. I very much doubt that the interest on this loan is tax deductible in Australia but maybe in India? This will depend on the tax laws in India and I guess what you use the funds for. Something to ask the accountant. Also I don't know the interest rates in India and whether you will be in a position to borrow money there but are you sure lending against your home is the cheapest source of finance for India?

My calculations for your income and expenses here in Australia is a little different to yours.

Income      2 x rental properties ($340/wk each)                     $35,360

Expenses   Interest on one mortgage (9% of $300K)               $27,000

                  Repairs/agent fees/insurance/rates/vacancies        $ 7,072
                  etc etc. is usually around 20% of the rent 

So assuming these 2 properties are your only Australian income your taxable income should be about $1290 meaning you will pay about $390 tax. 

However, don't forget you will also need to pay the $27,000 interest on the loan on your home.  

A quick google bought up the following site about home loans in India. Maybe you can have a play to see what you could borrow and at what interest rates there.

http://homeloansindia.net/ 

I am not an accountant. Just an expat who went through the same questions once upon a time.

Hope this is of some help.
Elka  

Hello Pirate

What you describe is not "wrong". It just doesn't give you the most interest savings.

In fact if you know that you are not financially disiplined (i.e. if you know that the only way you will not overspend on lifestyle each month is if you first allocate that portion) then your method is better for you.

There is nothing wrong with the balance in the offset account fluctuating each month as long as the general trend is upwards.

In case you missed it here is a link to a post by Qlds007 which explains some of the other benefits of an offset account.

https://www.propertyinvesting.com/forums/getting-technical/finance/4325393?#comment-177325

Cheers
Elka

Hello Pirate

While it's a nice exercise to see what the minimum amount is that needs to be deposited into an offset account to be able to pay out the loan after 30 years, I assume that you realise that this is not the best use of an offset account.

The beauty with an offset account is that while it can save you masses of interest it doesn't actually effect the loan it's coupled to. The idea is to deposit all of your income into the offset account as each dollar that is there for even one day saves you that days interest. You can then use this account to pay for both personal and business expenses. Some people use their credit card during the interest free period so as to be able to leave the cash in the offset account for as long as possible. Obviously the CC needs to be fully paid off each month as it becomes due. This method is for the financially disciplined only but will save a lot of interest.

You probably know all of this already but just in case ………

Cheers
Elka