Can anyone explain how I can do this and get advantages of negative gearing. I wish to live in my investment property and rent out the other. Normally all rent from what was my home would be taxable and negative gearing wouldn’t apply, but someone has mentioned through some method of re-financing I’m able to get all the normal investment loan / property benefits.
Hi,
Am I right in understanding your question?
You currently have a home on which the interest is not deductible and you want to work out a way where it would be?
Well, one option is you could set up a new entity (such as a Trust) and then sell the property to your trust. Of course, the major hurdle with this would be the stamp duty and re-working the finance on the property.
Please note though with this option there is no principal place of residence expemption re: capital gains tax (CGT). This means that while you get to claim a tax deduction for the costs>income, when you sell you also have to pay CGT.
Still, in the new entity, you could be charged rent (it would have to be on a commercial basis) and then the interest would be deductible. Depending on the $$$, it may or may not result in a -ve geared outcome.
If your question stems from the fact that you own two houses – one your home and the other an investment property… then you could just switch them over so that your home is no longer your principal place of residence.
Provided you rented out your old home then you would probably be eligible to start claiming as a tax deduction the interest and other costs (rates, repairs etc.) too.
However the same costs on your new home (old investment property) would cease to be deductible since they are now of a private and domestic nature.
Regards,
Steve McKnight
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**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
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