My plan is to renovate my current property I live in, move out & rent it, while moving into another property TO BE purchased. Then renovate this property, move out after 6 months, rent it & buy another to live in, renovate & so on.
Do you believe this is cost effective (until I build a big enough portfolio that it makes economic sense to be using trades to renovate mutiple properties at once)? Moving every 6 months is not an issue to me.On a separate note, what do you think about creating a company to buy a property, yourself move into that property & pay rent to the company you have created? Are there any tax advantages in doing this? Is it legal?
What impact would it have on your lifestyle?
Personally, the only things I pick up during a renovation is a pen and mobile phone
If you use other peoples time, you can be doing multiples at once, your strategy can only do one at a time with a huge impact on lifestyle.Trusts are better entities to buy renos in than are companies, but it would take too long to go into reasons. You need advice from your accountant.
Xenia wrote:What impact would it have on your lifestyle?Personally, the only things I pick up during a renovation is a pen and mobile phone
If you use other peoples time, you can be doing multiples at once, your strategy can only do one at a time with a huge impact on lifestyle.Trusts are better entities to buy renos in than are companies, but it would take too long to go into reasons. You need advice from your accountant.
Thank you for your reply.
When I get to the stage that I have built a portfolio, then yes I will be using pen & mobile phone, but until then I trust my ability to renovate (I have just re-done the back decking & I did a MUCH MUCH better job than the original builder). I don't have enough equity yet to buy multiple properties – slowly, slowly.
As for impact on lifestyle, I hate to sound cynical but my experience in life is that people who are supposed friends, are often not so & people generally are consumed with themselves (read The Road Less Travelled & Seven Habits Of Highly Effective People to understand where I am coming from). As a result, I don't think I would be losing any friendships. Besides after the renovating I have done to my house so far, I actually find I like it & appreciate seing the fruits of my work (& the kick I get that I can do a better job than a qualified builder). I also get bored VERY easily, so I need to be doing something, even after my well paid Monday to Friday job.
I will look into the Trusts v Companies issue – my father has a Trust. Although I thought Trusts have higher legal liability potential than Companies?? To save you having to go into a long typed out explanation, maybe you can direct me to a website on the issue.Thanks once again – I appreciate it.
Um, if you can renovate an IP, you can claim it on your tax. Renovating your PPOR is not very smart for a tax break…I know, I'm doing it right now!
But yes, it is one way to value-add, just pointing out that it would be better if it was an IP…
Handy Andy wrote:Um, if you can renovate an IP, you can claim it on your tax. Renovating your PPOR is not very smart for a tax break…I know, I'm doing it right now!But yes, it is one way to value-add, just pointing out that it would be better if it was an IP…
But if it is to be used for renting then I should be able to claim the works done as depreciation for the time I am not living there? If not, this is illogical.
As far as I am aware, any improvements you make to the house while it is your PPOR, can not be claimed…ONCE it is rented, if you do improvements then, you can claim those as a deduction through a depreciation schedule. This is how I know it…which may not necessarily be true…
Handy Andy wrote:As far as I am aware, any improvements you make to the house while it is your PPOR, can not be claimed…ONCE it is rented, if you do improvements then, you can claim those as a deduction through a depreciation schedule.How is this different from someone who owns a property that they don't live in, spend 3 months renovating with no tenant, then get someone in to rent & claim the renovations on depreciation? Absolutely ridiculous!
If this is the case, my next property I will create a company or trust to buy, then rent it back to myself
Actually, come to think of it, I could create a company, add their name to the title of my current PPOR & then rent back.Ozboy,
Correct me if I'm wrong, but I think if you create a company that then buys an I.P, you would need some taxable income from the company in order to claim any tax back.
You could use the tax claims from the property to cancel out any tax you may have to pay on the I.P's financial statement for the year, but there would be no tax refund against your own Personal Income Tax.
Better speak to the accountant about this.If it is your PPOR and using the "Temporary absence" rule, you have it rented, then any costs associated with this, like depreciation and interest costs are fully deductable, as if it was an Investment Property.
Whether the improvements were done while you were living there or while it was an IP is irrelevant, it will still be depreciable.
frini wrote:If it is your PPOR and using the "Temporary absence" rule, you have it rented, then any costs associated with this, like depreciation and interest costs are fully deductable, as if it was an Investment Property.Whether the improvements were done while you were living there or while it was an IP is irrelevant, it will still be depreciable.
I checked with a quantity surveyor & its deductible (I was sure Handy Andy's statements were not right!)
If you use other peoples time, you can be doing multiples at once, your strategy can only do one at a time with a huge impact on lifestyle.
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