turning part of PPOR into IP

I’m not sure about your interest rate deductions (probably could but it may be difficult to work out how much of the loan belongs to the room) but there’s one thing I would be very careful about, depending on your total property values, and that is my pet hate: LAND TAX! If you conduct any business in just one small part of your PPoR, then the WHOLE of your PPoR land valuation is added to your total for land tax purposes, wheras your PPoR is normally exempt. This happens in Qld, but I assume other states would have similar rules.
Does anyone else have a big issue with land tax? Does everybody know your PPoR is exempt? I was paying land tax for 3 years before I found this out. I managed to get it all refunded, as my PPoR pushed it over the threshold.
J

And you may lose the tax exempion status of your home. Why not do it and not declare it. It si not worth the hassle just to save a few dollars per week in tax.

Terryw
[email protected]

Crashy, as you live in Qld, you can easily check all the details at http://www.osr.qld.gov.au/taxes/land/index.htm
The new threshold in Qld is $220k, and the rate increases depending on how much over the threshold you are. eg $1,000,000 it’s 2% (marginal rate). It’s all in the pdf info sheet.