Hi all,
hopefully i am posting in the right section,
i've just purchased a property, eventually this house will be rented out, but at the moment, it requires at least 3 months work of renovations.
So, my question is,
is it better to claim first home buyer's grant of $7K and take my time to fix up the place for 6 months OR
treat it as investment from day 1, do it up asap and rent it out?
If i go for option 2, can i claim any of my renovation expenses for repairs and maintenance? some of the work requires in the house, ie: changing the whole bathroom, kitchen, rewiring, install ducted heating, hotwater system?
Appreciate some advise in these area.
Cheers.
I don't imagine the FHOG and the 3k bonus if living in Victoria will last forever. It's my guess it will finish this year or in the next year or so.
It may be worth thinking about weather you want to cash in on it or not. It depends entirely on what you decide to do. But if you go down the track of fiddling around and renovating the house while living in it it's also an option that you could rent out a single room to someone if the tenant don't mind living their whilst you go about the renovation process. State Revenue Office don't mind you renting a room or two and still receiving the grant. This can help with a bit of extra income.
If you have sufficient funds to keep you going with the repayments and the renos for 6 months until you can rent it out, then that may be the go and get the FHOG.
The renos are tax deductible, but I think they might be classed as improvements, so are therfore depreciable rather than normal repairs and maintenance expenses. Talk to your accountant on that one.
After you move out, the property can be used as an IP for upt o 6 years before it becomes liable for any cap gains tax, and it is pro-rated from then on, so no big deal.
There are also tax consequences to be considered. You cannot claim a property as your main residence until you live in it first. If it is not a main residence you may have to pay CGT if the place is sold.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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