talk to an accountant for exact numbers but basically:

Purchase cost plus any costs to strata = total /6 for price per unit
eg price per unit = $300K
sell for $330K
Then your profit per unit is $30 K. Depending on how long you held them (>12 months 50% CGT reduction) and what your current tax rate is will dictate your final tax bill.

Unfortunately you cant just take the profit from half and apply it to the remaining loan and not pay tax. Something about avoidence there, but good on you for trying!!!

Mick

PS before thinking about the tax as part of your DD, you need to check with council to see if it can be a strata complex. You need to consider the fees in doing so, the potential need for any fire walls etc. If it was easy to just sell off 2 or 3 then why have the current owners not done this? Be careful of paying 6 times a single unit price when they are not yet strated. If you do basically then there may be little profit left in the deal for you. Watch your numbers carefully.

"You missed the boom" said the locals
"Coal prices will fall and the mines will put people off"
"I wouldnt buy in a small mine town"
"too risky"

Well the place I bought in November just exchanged. Bought $252K, rent $460pw, paint reno and garden tidyup ($2200), increased rent to $490. Has potential to put in  granny flat and increase yield. Sold for $340K, private sale so no agency fees.

Not conplaining here.

Mick
PS that doesnt mean I endorse going and buying anything. Considerable time and DD was conducted on these deals. You get back what you put in.

If you are certain that the lower area is not classified as "habital" as per  Scotts infom then may I suggest it allows a bargining point for you. If it is advertised using those rooms and thus impacts the sale price, can you offer less based on that not being legit?

Never know unless you try, because if you dont ansk and buy, when you sell someone else is only going to try it on you.

Mick

Hi Eh,

In my circumstances I pay down the PPOR, as that forms the basis of my strategy. Not to say this suits everyone, it just suits me. If I was repeating it with an IP in place of the PPOR then I would run it with an offset.

Mick

Hi Angela,

Double check….did you WITHDRAW the equity (ie increase the loan amount) or did you CROSS SECURITISE (ie not increase the loan on now rental , but secure the purchase of new PPOR against is equity)?

If you dont recall the loan amount increasing then perhaps you have both properties secured together.

Either way, the interest you can claim is the interest component on the rental only.

Eg

Original Loan $100K

Withdraw $50K against equity

New loan $150K against rental

Only the $100K interest is deductible

Hope that helps, but always chack with your accountant.

Mick

my understanding
1. you are required to live in it as PPOR for AT LEAST 6 months within the first 12 months. google FHOG for clarification)

2. If you rent out whilst living in it at the same time you can only proportionally claim deductions (ie if she uses 50% of the house then can claim 50 % of costs) – although it would be woth asking if the rent as a proportion of the costs could also determine % claimable (ie is the rent she pays is equal to 60% of the costs then can you claim 60% costs) maybe another forumite can clarify

Mick

Check with the council in your area PRIOR to submitting an offer on their "boarding house" rules. If you exceed a certain number of warm bodies that are unrelated in a house then it falls under the boarding house catagory and there are different fire codes etc that you will have to meet, particularly if you are in QLD (which was overhauled after the Childers Disaster).  If you find out prior to submitting an offer that this property is not recognised as such, and is in breach of the codes, then you will have a great bargining tool, ie if its sale price is derived partly or wholly from the rental income………..I am sure you understand.
Mick

As mentioned above, check out the mining towns in Qld. I have properties in Gladstone, Moura, Biloela and Baralaba, all purchased in the last 6 months, all +ve cashflow, and all with that "potential" to be improved (ie 2 will subdivide, 1 will go dual occ and the other 2 will be reno'd).  All multiple industry, multiple mine towns so not entirely dependant on an individual mine (OK maybe that is a bit of a stretch for Baralaba, but it was a "cheapie"). Locals keep saying "you have missed  the boom" but with new infrastructure going in, and rents still rising I feel quietly confidant. And hey, as for coal, if petrol keeps rising, we will need electric cars and then go the coal!!!! (obviously NOT an expert opinion…..just tongue in cheek……before I get shot down  )

Happy hunting

Mick

Make sure you insurance is up to date as you will have a higher risk of "runners" and those who are just vindictive and damage things. Not to say this will occur, some tennants in the lower socio areas are more reliable than in other areas, just some are not!
Mick

isnt there a clause that indicates if either party dies the contract can be voided? If so, and you reno, what security do you have that the property will indeed settle?
Mick