I am currently looking at a unit to buy which requires renovations badly if I get the australian first home buyers grant & live in the property for six months performing minimal renovations, what would the procedure be for turning this property into a investment property in the eyes of the government, & what steps would have to take place before I can claim the renovations as a tax deduction? The answer to this question will more than likely determine if this property is suitable for me to buy. All answers are hugely appreciated. Thanks in advance.
To turn it into a rental property is easy. Just start renting it out and keeping records.
If you renovate whilst you are living there you will not get any tax relief. When you sell the renovations costs may be used to offset CGT – if any. This is your home so will be CGT exempt for up to 6 years tenancy period.
Cheers,
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
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.
Thanks HEAPS for the reply,
Does this mean I could get the first home buyers grant live in it for six months (or twelve which I think is what is required for the first home buyers grant) do minimal renovations (not tax deductable).
Than rent it to my girlfriends sister at a reduced rate, keeping records of her renting & than renovate claiming the renovations as a tax deduction? & how long would she have to be renting before I could renovate?
Thanks again Simon!
You can get the FHOG if you are buying a home. You need to occupy that home for 6 months starting within the first 12 months in order to qualify and keep the FHOG. You will also get a SD exemption in some cases.
If you rent the property out you can claim any repairs that keep the property at the standard it was when first rented. So if the HWS needs repair then that is deductible.
However renovations are seen as capital expense. Repainting in the first year is not seen as restoring the property to what it was when first rented but maybe after three years it might.
You need to do some reading so that you have a good grasp of what is a repair and what is an improvement.
If you aim at claiming as much as possible then it is probably wise to do all that work after it has been rented for some time.
Hope this helps
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
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.
The info does help heaps,
Unfortunately I was hoping that renovating the unit could be tax deductable and I would be slightly dodging up the system but unfortunately from what you have said this is not the case.
Thanks heaps for the posts.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
