Greetings all
I was wondering what the legalities were of selling my current PPOR (which was paid off prior to obtaining a low doc for investing) and purchasing another PPOR living in it for say 12-24 months then renting it out as its on the beach.
1) Can I transfer the mortgage from the current LD LOC to the 2nd
2) If so when I rent out the 2nd PPOR would I then be able to claim the interest back on tax?
Regards Bear
Transfering the mortgage from the current PPOR to secure over the 2nd PPOR (is that what you want to do?) should be OK if your loan offers “portability” there may be fees involved though. This essentially means your first home will become unencumbered (and you can have your title back) and they will stamp the mortgage onto your beach house.
Liz
Mortgage Lender
Originally posted by Lizzy:Transfering the mortgage from the current PPOR to secure over the 2nd PPOR (is that what you want to do?) should be OK if your loan offers “portability” there may be fees involved though. This essentially means your first home will become unencumbered (and you can have your title back) and they will stamp the mortgage onto your beach house.
Liz
Mortgage Lender
Thanks Lizzy , but the question is asked along the lines of selling my current PPOR prior to purchasing the beach property.
And then once the beach property is rented oout can i then claim the interest on such property on tax?Regards Bear
Oh sorry Bear, are you trying to avoid hefty payout fees for your current mortgage? If so the lender you are with now may not charge these fees if you plan to take out new borrowings with them in a short time frame. It’s worth asking them, or even negotiating at a higher level (not just to your standard lender) for this to be taken into account if there are payout fees. Does that help?
As to your second ? I always avoid accounting questions like the plague, I’m sure someone else will help you here.
Liz
Mortgage Lender
ok, cool thanks lizzy
Regards Bear
Originally posted by BEAR1964:And then once the beach property is rented oout can i then claim the interest on such property on tax?
Regards Bear
Hi Bear,
You will be able to claim all the usual expenses from the period that the proeprty becomes income earning, but you will not be able to claim for expenses previously incurred when you lived in the property.
Assuming the property is your only PPOR at the time capital gains will be exempt (don’t forget the 6 year rule) from tax and apportioned over the total life of the property.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Derek is referring to the 6 year CGT exemption one enjoys after moving out of their PPOR for any reason. This continues for 6 years unless they buy another PPOR.
Cheers,
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
You can only have one PPOR at one time. (Expect for a period of 6 months between proeprties when you can have two-allows moving time).
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
I don’t know how other people see the following :
If your owner occupied home becomes an investment property it may be a good idea to spend a couple of hundred dollars to establish, via a valuation, the value of the property at the time you switch its purpose from owner occupied to investment property.Anyone have any idea about this ?
Waste of money ?Pisces
Rob, can you quote me the legislation for your statement? Everybody I have ever spoken to has said that the CG val starts from the date you vacate as your PPOR if when sold it will be subject to any CGT.
It is apportioned if you have as an IP first, and then move in, but as far as I’m aware it is not the other way around.
Another thought – as you believed the 6 year rule was ‘rumour’, then perhaps you don’t know the answer at all?
Cheers
MelRob
My understanding is CGT only applies to the period you rent out the property (unless you use the 6 year expemption).
eg. If you purchased for $100,000 lived there for 10 years and then moved out and started renting it when it was worth $250,000. You then sold it a year later for $300,000. I owuld say the taxable capital gain would only be based on the gain during the period it was rented out – ie based on $50,000.
So it would be a good idead to get a valuation at the time you moved out to demonstrate to the ATO how you arrived at the estimated value.
But this is only my udnerstanding, I cannot cite legislation on this and am not an accountant, so may be wrong.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Originally posted by The Mortgage Adviser.:Absolute waste of money. CGT is calculated and apportioned according to the market value of the property at the date of sale. It doesn’t matter what it was worth when you switched it from owner occupied to investment.
Gee, I’m sorry Rob – what pat of this statement suggested it was only your opinion – and not absolute fact?
I note you evaded my request for your legislation to back up your theory by throwing it back to me… I said ‘as far as I am aware’ and ‘everybody I have ever spoken to’. I did not state it was fact.
And no, I haven’t avoided your request, but finding anything (useful) on the ATO website hasn’t been fun tonight.
Cheers
MelRob, I cannot see where that tells us HOW to calculate the CGT based on whether or not you lived in it first, and then rented it….
Cheers
Mel
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