Hi everyone first time poster
My wife and I are wanting to purchase a new unit in cairns to rent out for around 20 years and eventually live in for 6 months of the year.
What are most people looking for to live in something already furnished or something empty. As by the time the unit we are looking to purchase is built I can see a glut of apartments being in the area. Just want to get some sort of advantage as the purchase is more of a lifestyle investment for down the track. But obviously renting it out for quite a few years will also be a priority.Interested in peoples thoughts
Furnished homes appeal to short term renters.
New furniture can be well depreciated but it does mean a higher maintenance requirement. I just went around to one of my furnished IPs to replace a $20 kettle
Correct me if I am wrong, but I do not think you can negatively gear a property that you sometimes use for your own holidays – there are laws (such as CGT as well) that complicate this kind of investment.
Elmina
It might have been vacant for six months
Sorry should explain myself a little better ………….initially for say 20 years I will use it only as an investment property until such time as I retire which it will be left empty for six months of the year
Hi.
Yes I agree, providing furniture in your investment apartment can cause you to incur additional expenses at time. There are a couple of upsides to having a fully furnished apartment – obviously or in- obviously you are able to claim the depreciation expense as a tax deduction. Furniture can be depreciated over 5 years, after which it may effectively be worthless and may also require replacement at times. It is essential you have a Depreciation Schedule drawn up usually by a Quanity Surveyor.
An account can then help you to fill out and submit a Tax Variation Form which essentially allows to to pay a reduced rate of tax from you regulary income each week, and this then has the effect of increasing your cash flow to help service you loan.
It is in your best interests to get professional advice about these things from an Accountant or Financial Planner.Having a fully furnished apartment, especially in a tourist location like Cairns, can provide a more attractive and marketable rental to your potential clients.
Regarding being able to live in your investment – There are two options to consider.
First, presenting your investment apartment to the market as Short Term Accomodation can provide you with a very fluid return.
There are Property Management companies around that specialise in this type of accomodation and it can be presented to the market at a weekly or even a nightly rate that enables you to effectively receive a higher rental return.
This can have the effect of transforming your investment property into a positively geared property that actually generates income for you.
If you choose this options and do infact have the property as short term accomodation, you can simply make a booking with the property management and enjoy your stay.Second, whenever you decide to change one of your investment properties into your own home ie. your principle place of residence, it may cause you to be suseptable to the following situation:- Normally the loan you acquire to buy your own home requires that the lender place a mortage on the property. This is different for investments as the mortgate only exists on your own home. If your move from your home to another premises and turn your home into an investment rental property then it becomes subject to Capital Gains Tax for the entire time you retain it until it is sold at some time in the future.
You are given a period of grace of (I think) 60 days from the date you vacate the property (your own home) during which the sale is not subject to capital gains tax. The advice I have received from an Accountant for one of my clients regards this is that they should sell the property immediately upon vacating it in order to pay the least amount of tax.I hope you find this information useful and informative, but please be sure to get professional advice.
I appologize for any typo's
I can direct you to a current Apartment Project in Cairns if you wish
My office is located in Brisbane.thanks pjk1966 for your reply very informative. I am pretty well settled on what project my wife and I are interested in as we have a budget of under 300k and want a 2 bedroom unit. But if the project you mention matches this well yes then I would be interested.Thanks again for your help
After checking availability of the project I had in mind ther is only one 1 Bed + Study left available for 386k
So probably stick with the project you are looking at.
My contact details are visable in my profile if you would like to get in touch with me.All the best
If you're going to rent it as short term rental such as holiday rentals then you will need to furnish it without doubt. Also for holidays rentals I dont think you can get Landlord's insurance.
Hi gloveski,
I would advise you to purchase a IP elswhere so you can build more appreciation. 1bdr units won't get you far in terms of appreciation especially when you talk about city like cairns where are thosands of them!
Buy your IP somwhere else so it does better job for you and when you are ready to retire you would make more money investing elsewhere so you can have more options to choose from.
cheers,
michael
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