Hi Everyone,
I’ve just stumbled across this place, which seems full of well-informed people. I hope this question is applicable.
I’m currently an owner-occupier of a unit (valued at around $250k).
I’m now looking to buy a house which I eventually want to move into at around the $300k – $350k mark.
My plan was to buy the house as an investment property so I can claim borrowing costs as a tax deduction (can I do this?) and perhaps move into it in about 1 year, and then rent out my current unit. The place will be -ve geared. From what I’ve read around here this seems to be a no-no, but I’m trying to achieve being able to live in my own house (rather than small unit) for as small amount of money as I can. I suppose I’m not after profits just yet.
If you are buying a place as an “investment property”, what is the minimum amount of time you need to rent it out before you can move in, and still claim borrowings costs (if you can at all).
I’ve been trying to do some figures myself to work out what exactly I can afford, but I feel I need someone with experience on the exact costs associated with owning a home, some experience with rental amounts, and occupancy rates, and also knowledge of expenses I don’t even know about, which I’m sure exist.
Is it beneficial to seek out a professional advisor who I can outline my plan to and calculate what my costs might be, and make sure I don’t make a big mistake?
If so, can any recommend any advisers who would be good at this sort of stuff? I’m in the inner north suburbs of Melbourne, Victoria.
Any information would be appreciated.
Apologies if I’m in the wrong area.
Thanks,
Baz.Baz
Nothing wrong with your strategy. Despite all of the positive talk about positive properties, these little guys are hard to find and most of us, like it or not, usually end up with some negatively geared stuff. Don’t forget that even thought it might be -ve geared you will benefit by capital growth.
The borrowing costs on an investment property are “amortised” i.e. spread out over 5 years. You can claim 1/5 of the total costs for each of the first 5 years. If you rent it out for 1 year and then move in, you only get to claim the first year’s proportion i.e. 1/5th.
Once you’re in, there’s no more claim for any expenses.
I’d highly recommend you talk to an advisor not only about your financial position but also about what entity you should buy your investment properties in.
Sounds like you’re on the right track.
Hope this helps.
Megan
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