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Thanks for confirming this Richard. Someone was trying to tell me otherwise but I was pretty sure that this was the case. Otherwise the ATO would be wide open.
If you were to move out and then use it for income producing purposes (renting it out) then for sure it would be worth it. You would get capital works deductions for your renovations and can depreciate the fixtures and fittings. The combination of the rent you receive and the deductions and depreciation that you may get may make a big difference to your cashflow. Good luck.
Thank you to all that have contributed. Some good links and information. Appreciated.
Thought as much. Corey – good point!
Similarily, are there any loans that you could believe could be accessed with an interest free period attached. You borrow and if you pay back within a certain time – no issue?
Thank you Jason.
Just digging this back up as would be keen to see what people’s mindsets are in regards to this area. Looks like great yields but big drawbacks as well.
You’ve definately cleared things up! greatly appreciated. I’ll get there I will!
Thanks alot Benny. I think i’ve finally cracked it. Am I right in thinking that if it was positively geared – rental income greater than all expenses that you can still get depreciation? or Capital Works Deductions?
Sorry to sound confrontational because i’m really not but what do you mean ‘what about the rental income you are earning?
I didn’t realise that the rental income had an impact on the tax deductions. Are you saying that if the rental income on a property exceeded all its outgoings that you could not then claim for interest on the loan?
I understand the negative and the positive bit.
Put another way I have been figuring from what i’ve read (obviously wrong!) that you’d work it out like this
Interest paid $16000 but tax deductible and therefore 31.5% of $16000 is $5040 – I therefore recieve back $5040
Property management $1200 but tax deductible and therefore 31.5% of $1200 is $378Where is my logic failing me :(
Hi Terry,
But do you not receive a tax deduction equal to your marginal rate for this cost?
hi guys,
thanks for your help. It seems that I may need to speak to an accountant in regards to the original loan remaining in place. The reason I asked the question is that it does feel somewhat like I want my cake and I want to eat it too.
My exact situation is that I’m buying a property and not long after settlement i’m moving away for work where accommodation is provided etc for an indefinate period of time but i’ll ensure that its below the 6 year mark. I’m wanting an owner occupied loan for the exact reason mentioned in one of the replies – great rates. Furthermore ideally I’d want it to be interest only. Based on an owner occupied loan, interest only at a rate of about 4.5 the property should be nicely positively geared.
Where I feel like i’m eating my cake too is my want to then use depreciation and tax benefits on rent management etc.
If I can do all of these things i’ll be very happy but also pleasantly surprised.
thanks for your help
Ok, from what I’ve investigated it seems that if you buy a property and immediately rent it out then it can’t be considered your por. if she could she would buy the property without tenants already in, even for one week and put herself in a position where she can demonstrate she has lived there or there is an intention to live there. Alas, she is renting it currently off her parents and as soon as she leaves, her parents will want tenants in. 12 month lease means it would be potentially nov/Dec next year before vacant again and therefore a good time to buy. That being said, as she rents there now, her driving license, post, bills etc etc all corresponds to this being her home. Can this not be used as evidence to put forth after purchase with tenants in that it is her por? Just a thought.
