All Topics / Help Needed! / Is renting out 3 rooms of your house classed a s investing

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  • Profile photo of hellfirehellfire
    Member
    @hellfire
    Join Date: 2006
    Post Count: 3
    April 9, 2007 - 3:44 pm

    Hi,

    I am very confussed about the idea of investing.

    I currently have a block of land and I am paying heaps off it, because I am on a good wage at the moment.

    I want to put a house on the block, and I stay in one of the rooms and rent the other 3 rooms out. Is this investing ? can you claim taxes and all the other investment write offs.

    My job is fly in  and fly out, and I am only home for 2 1/2  weeks out of a month. Currently I am staying with friends but this needs to change. 

    Would it be worth me renting? or is that dead money.

    I was originally going to put a house on the block and rent the house out as an investment, but I need somewhere to live, so i either have to rent or stay in one of the rooms. Can anybody help.

    Which is the best way to go. it would be easier for me to stay in one of the rooms and then I can get the first home buyers grant, stay in there for 12months rent the other rooms out, and then re assess the situation, 

    WHICH WAY DO I GO.????????????

    Because I am on over $130pa I was  wondering if it was going to be better to rent the whole house out.????

    I DONT KNOW PLEASE HELP

    Profile photo of XeniaXenia
    Member
    @xenia
    Join Date: 2002
    Post Count: 1,231
    April 10, 2007 - 12:44 am

    Does it really matter what the terminology is classified as? If it makes sense to rent out 3 rooms then do it? Why not do this withr your PROR then buy another investment property where you rent out the whole house and offset losses against your income?

    Sounds like a trip to your accountants office may be worth while!

    Profile photo of elkamelkam
    Member
    @elkam
    Join Date: 2006
    Post Count: 722
    April 10, 2007 - 1:54 am

    Hello Hellfire

    While your at your accountants you might also like to discuss with him the ramificatiins of renting out part of your PPOR as far as CGT goes at some point in the future.

    It may be worth your while, depending on the size of your loan and your expectations of capital growth in the area, to live in it solo for as long as it takes you to qualify for the FHOG and stamp duty discount and then rent the whole thing out while renting yourself elsewhere. In this scenario you get to to rent it out for up to 6 years without affecting the CGT free status of your PPOR. Even nicer, if you move back in for a few months before the 6 years is up you can start again.

    In both cases you can claim expenses. In the first case naturally only a proportion and in the second after you start renting it out..

    The ATO site has good information on all of this and while time consuming, reading it first may help you ask your accountant all the right questions. 

    http://www.ato.gov.au
     

    Cheers 
    Elka

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    April 12, 2007 - 12:57 pm

    Claiming expenses on part of your house will probably end up with you paying more taxes in the long run. plan carefully.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

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