All Topics / Help Needed! / Cost of making my IP my PPOR
Hi,
I am getting a return of $14,800/annum rental yeild from my IP. i am in the $70-$75K income range.
I want to move into my IP. I do not own any other property. I am currently paying $200/week in Rent, and i have to move out of there soon. I would expect to pay at least between, $230-$260/week for a new rental property.I also expect my income to go down in the next 6-12 months as i am trying to develop a business and will be on LWOP soon.
I would like some suggestions on whether moving into My IP would be a good idea esp when my income is going down.
What are the costs and benefits. I'm aware that i would be losing on th extra money i'm getting in rent compared to what i am paying in rent, and also i am getting negative gearing, and depreciation.
I would lose all these incentives if i moved there. I would like to make a proper decision.
Also my IP is about 12 KM further from the city than where i live now.
Best Regards
Nepash
What is the insurance, council rates, Water rates for the IP cost you as you would be paying for these expenses . I will guess a figure of $3000.
Lost Rent = 14800
Expenses = 3000
Total = 17,800
Cost per week = $342
If you purchased the property after 2000 and rented it out you may be elligible for First home owners grant you need to look into this.
If you move in you need to get investment property valued by a valuer as you are changing the capital asset status from investment to PPOR and this is a CGT event. This makes it easier to work out Capital gains tax in the future for the time it was an investment.
As PPOR is exempt from CGT
So
Purchased –
Cost base = Purchased Price
Change of status
Capital Gain = Value valuer noted it as – Cost base = Capital Gain
Future sale proceeds – Value Valuer noted it at = Exempt capital gain
Council Rates $1,250 P.A
Insurance incl, Landlord $480 P.A
I bought the Property in Oct 2008. Its been rented ever since, i did not claim the FHOG. I would only be living there for a short while, i would not live there permanently, as it has development potential.
How much in $$$ Terms would i be worse off, if i was to move out.
Please give some advice.
Thought Duckster had already given a good explanation of this.
Not enough real data to provide an accurate assessment.
Richard Taylor | Australia's leading private lender
Thanks Richard,
Can you please let me what other information i could provide for you to make a better assessment.
As it is further away from the city, will you need to commute daily?
On one side of the equation is the loss of rent and claimability of interest and expenses/depreciation (so there is the offset of negative gearing) on the other side you will have to pay all expenses & interest from your net income however you may be able to claim the FHBG as noted above.
If you continue to rent elsewhere you will still be getting your neg gearing/depr & some income however you will be paying rent. As you may be in a lower tax bracket it may not be worthwhile so you will need to do all of the numbers yourself to satisfy you of the decision – you will need to consider the net aftertax scenario ie before (living in rented premises on current income) and after living in either rented or your own property taking into consideration your higher living expenses.
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