hi, im new to property investing, coz im young & just thinking about buying a house, and i was just wondering if it is possible to buy an invesment property & rent it out to pay off your mortgage? are you able to live in it as a residential property after that? or is the saying that ‘once in investment property, always an investment property’ true?[blink]
Yes you can. All you do is get a valuation done when you move in. The capital growth while renrted is taxable. Caital growth in an owner occupied property is not. The tax is only paid when you sell. Hope this makes sense.
Dave
Sure can move in to it after you rented it for a few years to pay off mortgage. A good idea is that when rented do all and I mean all of the repairs and reno you would like when living there.While its being rented its a tax deduction and when you live there its not.
So rent it fix it and when its yours(and not the lenders) do what you want.
DD
Don’t sweat the small stuff,and it’s all small stuff!!
Hi Siacci,
The ATO has moved towards an apportioning process when determining CGT liabilities on a residence that was an IP and PPOR during its period of ownership.
See below from the ATO’s CGT booklet.
“Main residence for only part of the period you owned it
If a CGT event happens in relation to a dwelling you acquired on or after 20 September 1985 and that dwelling was not your main residence for the whole time you owned it, you get only a part exemption.
The part of the capital gain that is taxable is calculated as follows:
Total capital gain made from the CGT event
X
Number of days in your ownership period when the dwelling was not your main residence
total number of days in your ownership periodExample
Main residence for part of the ownership periodAndrew bought a house under a contract that was settled on 1 July 1990 and moved in immediately. On 1 July 1993, he moved out and began to rent out the house. He did not choose to treat the house as his main residence for the period after he moved out, although he could have done this under the continuing main residence status after dwelling ceases to be your main residence rule. The ‘home first used to produce income’ rule does not apply because Andrew used the home to produce income before 21 August 1996.
The contract for the sale of the house was settled on 1 July 2002 and Andrew made a capital gain of $10,000. As he is entitled to a part exemption, Andrew’s capital gain is reduced as follows:
$10,000
X
3,288 days
4,384 days=
$7,500″
Sorry about the justifications.
This may be more reader friendly.
http://www.ato.gov.au/individuals/content.asp?doc=/content/31570.htm&page=11
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
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