Hi Guys,
Recently, my partner and i have purchased our first property, its a fairly new unit with 2 bedroom, 2 toilets, 1 shower and 1 lockup garage. Initially, we wanted to move in there, but somehow it occurred to me that the unit would be an ideal location for renting as its close to a Westfield shopping center and the station. (Sydney Australia)
But after a few quick number crunch, we found out that Rent around the area is about $400 max and $350 average, Strata is at the $630 mark/qtr. I guess my question is should we:
1. Try to rent out the place? and put in about $500 per month to cover the repayment + Fees, hold and wait while re-claim TAX off it until its value goes up, or
2. Just renovate and sell it as the rent will never cover the repayments and fees? OR
3. Continue the initial plan of just living in it while we repay it, and use the equity later on for another property.
Sorry if i'm a little green here, i just started reading about investment and bought Steve's book (After we bought the unit) and realized the potential of property investing.
Any help appreciated
Thanks again,
Alliance_22Alliance_22
Assume you are renting at the moment or live at home?
Is it your first property ? Is it in both names ?If its your first property then you will need to move into it for 6 months anyway for FHOG etc
If its your property and you rent or live at home then you still should move in for 3 months to make it your PPOR, then you can think about renting out etcSorry about that, i should be more specific
Currently my partner and i are living with our parents, and we have not rent the unit out just yet. Initially we were going to be living in it long term, but i have found Steve and this forum, and have changed our views on it.
Yes i think we do need to occupy it for 6 month first before we can rent it, so we're trying to see which would be most beneficial; Rent or Sell (a few things needs to be fixed up so it can sell for more)
Thanks for the lightning reply!
Alliance_22
If you qualify for the FHBG then you may also qualify for a stamp duty concession or exemption depending upon the cost of the unit. So using the unit as a rental may not be your best option in the first 6-12 months if you can carry the holding costs.
As for the works 'needing' to be done to the place – are they necessary or 'would be nice'? Will they add value? Can they wait? Can you live in it 'as is'? Will the rent be that much higher if you do the work? Rembember that these costs will probably need to be depreciated as they will be incurred in bringing the unit up to a rentable standard ie they are not R&M.
Best thing you can ever do is read read read, its best to do your own research!
– Start from scratch with your goals
– Build step by step
– most importantly follow your heart! if it seems to good to be true it probably is!good luck with everything!
Peter
New Automated "Hands Free" Deal Attraction Method – http://www.Get-More-Deals.com
Doing your homework is very important but at the same time I think if your parents are happy to help out why not utilise them so that you can free up your cashflow and use the funds to help pay for another IP. Mind me asking for what you paid for your property are you still contributing money out of your pocket if you still rented it out?
Doing your homework is very important but at the same time I think if your parents are happy to help out why not utilise them so that you can free up your cashflow and use the funds to help pay for another IP. Mind me asking for what you paid for your property are you still contributing money out of your pocket if you still rented it out?
Jins13 wrote:Doing your homework is very important but at the same time I think if your parents are happy to help out why not utilise them so that you can free up your cashflow and use the funds to help pay for another IP. Mind me asking for what you paid for your property are you still contributing money out of your pocket if you still rented it out?
Our Parents have actually helped out with the initial Deposit, which have saved us about 20k initially. We settled on the price of $340k and even if we rent it out at $375/w which is the average price of the area, we will still need to put in approximately $500 to cover for the sum of: Mortgage repayment + strata + Fees + Council Fees etc (So all up equates to about $500 a month)
Thanks again for the input!
I would move into the property asap. This is because once you live in it you can class it as your main residence and it will be CGT exempt. You can then move out and rent it for up to 6 years and still maintain the CGT exemption.
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
Terryw wrote:You can then move out and rent it for up to 6 years and still maintain the CGT exemption.Does that mean i have to privately rent it? or can i still use an agent if i was to qualify for CGT exemption?
Thanks for your advice Terryw
Alliance_22
You need to stay in house for 6 months to meet the governments requirements for the FHOG and get your stamp duty exemption.
After that ( well more after 3 months or so ) the house becomes your PPOR, you do not pay CGT if you sell your PPOR. You are allowed to leave it for up to 6 years and it will still be your PPOR and CGT exempt, as long as you do not claim another house in that time.
You can rent it out through an agent or not it doesn't matter. You are not breaking any rules.
If you move back into the house for 3 months and then leave and rent it out again later ( within 6 years ) the 6 years restarts.Just to clarify, the 6 year exemption is ONLY available if you do not buy another PPOR in that time. You can only claim one house as your main residence at a time.
Like WJ says, you can rent it out anyway you want, it has no bearing on the CGT rules.Hi
You also need to factor in the depreciation allowances.
Use our calculator to get an approx. cost.
All the best with the decision.
Regards
Tyron
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