[biggrin] Ok so not really but it feels like it right now!
I have been reading/saving for too long for my own liking and my partner and I have almost got enough for a small deposit for our first property!
For years I have focused on buying investment properties and resigned to the fact that I would lose the $7000 FHOG. What I didn’t know till recently is that if we buy a PPOR in NSW we will also get the stamp duty exemption.
If we buy an IP we are still eligible for the FHOG but will not get the stamp duty exemption when we do eventually buy our PPOR. We live in Harbord (NSW) so this would equate to approx $16000 on a $400000 unit.
I have done research on a particular area that seems to meet all the neccessary criteria for capital growth with yields of approx 5%. However all of a sudden everyone is telling us that we should buy a PPOR instead of an IP (friends, parents, course teacher, mortgage broker). My dilemma is – do we invest in a $280000 IP (3-4 br house) interstate where we can comfortably service the loan or should we buy a PPOR (2 br unit) in harbord which is quite a desirable suburb where rents are increasing significantly and steeply (we know cos we are renting here), however we would be stretched to our limits meaning that the idea of buying IPs is out of the question for years.
Do you think the stamp duty exemption is that important??
Ahhhh I don’t know…what would you do??
PeachPeach
One possibility is to purchase a property as a PPOR so you can claim the FHOG and get the decreased stamp duty benefits but then after a year once you have satisfied the FHOG grant criteria you could then rent the place out.
So effectively you can claim both the stamp duty and the FHOG but the consequence is not renting out the property for the first year. Also remember that once the property is an investment not a PPOR you can also claim the interest and other expenses, which is very significant.
Hope this helps,
DaveI agree with Dave but make the following points.
Period of occupancy to qualify to keep the FHOG is 6 months not 12. 12 months is a common misconception.
Another benefit of buying it as your first PPOR then renting is the CGT exemption you will enjoy.
Cheers,
Simon Macks
Residential and Commercial Finance Broker
[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.
That’s correct… just 6 mths.
In effect… you could move in on day 364 and live there for
“a continuous period of 6 months” and still be eligible for the FHOG.happy hunting,
Anthony.Originally posted by Mortgage Hunter:I agree with Dave but make the following points.
Period of occupancy to qualify to keep the FHOG is 6 months not 12. 12 months is a common misconception.
Another benefit of buying it as your first PPOR then renting is the CGT exemption you will enjoy.
Cheers,
Simon Macks
Residential and Commercial Finance Broker
[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.
Hi Simon,
I heard somewhere that your PPoR if used as an I.P is eligible for capital gains tax for the period that you use it as an I.P? I don’t know how the calculation is done though.
This is pertinent to me as our PPor is an I.P while we are living in the USA for 2.5 years.
Any clues?Cheers,
Marc.
[email protected]You can rent your PPOR for up to 6 years without any CGT impact.
If you buy another PPOR then this ceases. You can only hold one PPOR at a time for CGT exemption. The exception is if you are selling the first ppor then you can overlap them by 6 months.
Simon Macks
Residential and Commercial Finance Broker
[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.
Hi guys,
I was not aware about the stamp duty exemption on a first home. Can someone please tell me how much this stamp duty exemption is? And for which states it applies to?
Thanks
Paul[suave2]Dear Peachy
Let me offer the words of Napolean HIll to you,
“Opinions are the cheapest commodities on earth. Everyone has a flock of opinions ready to be wished upon anyone who will accept them. If you are influenced by opinions when you reach decisions you will not succeed in any undertaking…..Keep your own counsel, when you begin to put into practice the principles described here, by reaching your own decisions and following them. Take no one into your confidence, except the membersof your “Master-Mind” group, and be very sure in your selection of this group, that you choose only those who will be in complete sympathy and harmony with your purpose. Close friends and relatives, while not meaning to do so often handicap one through “opinions”
So there you go, surround yourself with people that know what they are talking about and understand your goal and stick with your gut feeling!
Originally posted by L.A Aussie:Originally posted by Mortgage Hunter:I agree with Dave but make the following points.
Period of occupancy to qualify to keep the FHOG is 6 months not 12. 12 months is a common misconception.
Another benefit of buying it as your first PPOR then renting is the CGT exemption you will enjoy.
Cheers,
Simon Macks
Residential and Commercial Finance Broker
[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.
Hi Simon,
I heard somewhere that your PPoR if used as an I.P is eligible for capital gains tax for the period that you use it as an I.P? I don’t know how the calculation is done though.
This is pertinent to me as our PPor is an I.P while we are living in the USA for 2.5 years.
Any clues?Cheers,
Marc.
[email protected]One more point. You must establish it as a PPOR and then rent it to qualify for the exemption.
If you move into an IP then you owe CGT for that period prior. If you then move to the US and rent it then it will be exempt for the first 6 years. If you move back in at 5.5 years then move out again the 6 years starts anew.
It can be useful and I am told the legislation was changed to accomodate the pollies on foreign service …
Simon Macks
Residential and Commercial Finance Broker
[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.
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