Hi all – this is my first post so hope I don’t ramble on too much.
12 months ago we used the equity in our own home to purchase two IP’s both on separate Investment Loans – one is tenanted and the other we decided to move into and renovate. We then rented out our own home – the rent from it comes directly off the loan for the one we are living in. Problem is that we really like living in the one we have started to renovate (it’s much bigger and in a bushland setting – lots of wildlife). We now want to sell our original home and put that money towards another IP and some towards the renovations. Am I right in thinking any money from the sale will be CGT free? Then the question is if we continue to live in the current IP can we claim it on tax or does it then become our PPOR and if so is that from the date of sale of the other home and do we have to it valued and pay CGT on the difference in value between when we originally bought it and now. The other option I was thinking of is can we not have any of our properties as our PPOR and rent the one we are in from ourselves??? Bit complicated I know – but any advice would be appreciated. nolao
I’d suggest you get some real advice from an acountant who specialises in IP investments.
As a general rule of thumb though if you have earned income from your previous PPOR the tax department will look at the difference in what it was worth when you moved compared to its value when you sell and tax you on the difference.
As for making your old IP into PPOR, same principal applies (I guess) except in reverse.
Like I say that is my belief but I suggest you get someone at the ATO or your accountant to verify itverify
markk
Happy Hunting
http://www.kentscollections.comSpeak to your accountant re the Capital Gains Tax issues.
From the interest/rent point of view you can’t rent from yourself unless there another entity like a trust involved. Why don’t you sell your former PPOR (which you want to anyway), pay off the loan on the property you are living in, then borrow against that property for your new IP. Since the purpose of the borrowing is to make income from the new IP, the interest will be deductible even though it is secured against your PPOR
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