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Sounds like your capital gain will need to be apportioned between when the Investment Property was your PPOR and when it was not.
An accountant would be able to work this out for you,
Fletcher Tax Accountants
http://www.fletchertaxaccountants.com.auPlease note comments made should NOT be taken as specific taxation, financial, legal or investment advice. Please seek professional, specific advice.What would be the point of doing this restructure?
The property is dually CGT exempt as it is Pre CGT and your parents' PPOR in its current state.
Changing titles is a change of ownership hence causing a capital gains event and loosing the pre-CGT status going forward.
Fletcher Tax Accountants
http://www.fletchertaxaccountants.com.auPlease note comments made should NOT be taken as specific taxation, financial, legal or investment advice. Please seek professional, specific advice.Andrew Sneddon is a good authority but is a tax consultant guru as opposed to a tax lawyer I believe. Based in Sydney CBD.
Fletcher Tax Accountants
http://www.fletchertaxaccountants.com.auMay I suggest discussing your plans with an accountant and a financial adviser. Both look at your situation from a different point of view and hopefully between the 3 of you lead to a beneficial scenario.
My advice would be to give your accountant/adviser as much information as possible about what exactly you want to invest in and any family circumstances which are in the mix to get the most efficient feedback and results.
Fletcher Tax Accountants
http://www.fletchertaxaccountants.com.auI refer my clients to 2 financial adviser firms depending on the client and their needs.
Navigate Wealth – Peter
Financial Spectrum – BrentonBoth based in Sydney CBD
Hope that's of help!
Fletcher Tax Accountants
http://www.fletchertaxaccountants.com.auAs per Terry's post – intention can change and the name under which you financed initially whether investment or home doesn't matter.
Just remember to note the exact dates the property began earning income.
Also be careful not to dilute the loan (ie. with drawing down for private purposes), as then the interest expense will need to be apportioned.
Fletcher Tax Accountants
http://www.fletchertaxaccountants.com.auPlease note comments made should NOT be taken as specific taxation, financial, legal or investment advice. Please seek professional, specific advice.Try Sygroup – a group of very professional accountants in Melbourne.
Joe
You need to be careful when you are doing these renovations ie pre tenancy or during tenancy as both have different tax implications.
Also need to distinguish between repairs (deductible) and capital improvements (depreciated)
The ATO is coming down very heavily in this arena with a rise in desk type audits of rental/IP claims.
Fletcher Tax Accountants
http://www.fletchertaxaccountants.com.auMatt
Regarding the trusts' carrying forward loss – is it a carrying forward tax or capital loss? You can only claim the capital gain against a capital loss but not against the tax loss.
In regard to calculations – have a look at the following link (also includes talk about applying concessions):
http://www.ato.gov.au/individuals/content.asp?doc=/content/33727.htmFletcher Tax Accountants
http://www.fletchertaxaccountants.com.auPlease note comments made should NOT be taken as specific taxation, financial, legal or investment advice. Please seek professional, specific advice.Thanks Kenny – I think you've covered all bases.
Repairs to a newly acquire IP are not deductible but repairs resulting from rental use are.
I would argue that the power bills during renovation would be a deduction as they are needed to actively market and rent out the IP. (Not so much water though!?) And I would assume this will be very minimal amount being as it is for 2/3 weeks.
You could even fit it all in within 1 week during daylight hours and not turn on the power nor water. But you need water as you yourself want to live there. … So perhaps skip claiming both of these entirely?
Be careful between differentiating between capital expenditure and simple repairs. Repairs are deductible whilst capital expenditure add to your cost base.
Fletcher Tax Accountants
http://www.fletchertaxaccountants.com.auPlease note comments made should NOT be taken as specific taxation, financial, legal or investment advice. Please seek professional, specific advice.For your expenses to remain deductible the IP must be 'available for rent' (ie genuinely marketed which sounds like you will be) or actually rented out, during the renovation time. This ensures you do not need to do apportionment of any expenses at financial year end.
Fletcher Tax Accountants
http://www.fletchertaxaccountants.com.auCheck your Property Management Agreement terms. To terminate an Agreement with your agent it must be in writing. How much notice is required depends on your actual Management Agreement. If you stick to this – you shouldn't be liable to the agent for anything.
As for the proposed tenant – she hasn't signed up for anything as yet – no lease agreement exists. As such, you can reimburse her the full deposit (if made) and leave it at that. What kind of significant damages can you be liable for? You are not in a legally binding contract.
But please check your obligations with a qualified Real Estate Agent.
Ben
Ask your friends/colleagues whom they use and go from there. Often they will point you towards a compatible accountant for you.
Fletcher Tax Accountants
http://www.fletchertaxaccountants.com.auThe ATO does not cancel ABN's on its own accord.
If you have not used your ABN within 2 or 3 consequetive tax returns it will spark a letter asking if you are still using the ABN or not. If you do no reply to the letter within the certain timeframe – the ATO will then proceed to cancel it.
Fletcher Tax Accountants
http://www.fletchertaxaccountants.com.auJust be mindful that the CGT exemption only applies for 6 years of absence from your PPOR. Afterwhich, an apportionment will apply (ie not be fully CGT exempt) or you need to reoccupy the PPOR to get a further 6 year exemption.
Fletcher Tax Accountants
http://www.fletchertaxaccountants.com.auHi Helena
You cannot claim GST on residential property expenses and you would not issue any tax invoices with GST from a residential property either.
Hence if your bookkeeping business is under the $75k mark – save yourself all the admin involved of being GST registered as you will be lodging NIL statements all the time. Hence you will claim the entire rental income received and entire rental expenses paid, via your Tax Return at year end.
If you were investing in a commercial property – then GST would apply on both income received and paid/incurred.
Fletcher Tax Accountants
http://www.fletchertaxaccountants.com.auYes penalties may apply if your over 10% of the estimate you gave/varied, but you can top up as you go if you see a particularly sensational quarter/change in circumstances.
I would suggest to be conservative in your estimates and leave room for unexpected income and expenses within your variation.
Fletcher Tax Accountants
http://www.fletchertaxaccountants.com.auYou can vary your PAYG but it only gets cancelled/stopped by the ATO dependent on your profits/earnings upon lodgement of your next tax return.
Fletcher Tax Accountants
http://www.fletchertaxaccountants.com.auHi Nicole, basically any work that requires you to work from home and use your computer etc. Can't be just for convenience but rather an expectation and requirement of employment or type of work.
Please feel free to email us direct if we may of any further help,
Fletcher Tax Accountants
http://www.fletchertaxaccountants.com.au
