All Topics / Legal & Accounting / Best tax outcome?

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  • Profile photo of xyaxya
    Member
    @xya
    Join Date: 2008
    Post Count: 62

    I bought my PPOR early this year and rented out half of it. As I've been saving hard and putting the $ to my offset account, I've managed to reduce my loan to half recently(with most of the $ sitting in the offset account). At the same time, the PPOR value would have grown by at least 10% based on nearby sales.

    Therefore, the tax benefit of claiming half the cost of interest & depreciation on the property now seems less attractive compared to reducing how much CGT I might have to pay when I sell the PPOR in future. 

    I'm just wondering, what would be the best options for me? 

    Should I continue renting out half the PPOR but receive it as cash in hand and not bother about claiming tax benefits. In this case, I would only have to pay CGT for the period which I claimed tax.

    Additionally, am I correct in assuming that any depreciation that I've claimed should be added back to the cost base of the property when I sell it?

    Any advice is very much appreciated. Thanks.

    Profile photo of crjcrj
    Participant
    @crj
    Join Date: 2004
    Post Count: 618

    I'm sure that you are not expecting anyone to recommend that you break the law

    Profile photo of xyaxya
    Member
    @xya
    Join Date: 2008
    Post Count: 62
    crj wrote:
    I'm sure that you are not expecting anyone to recommend that you break the law

    Of course not., was half asleep writing it… 

    It doesn't really matter if I continue renting out or not (although I'm aware that I should declare any rent received to the ATO),  as the rent received + tax claims are not looking too attractive now. I've managed to payoff my loan faster than expected, and would prefer to minise my potential CGT. Not sure if I'm missing anything?

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    saving a little bit in tax now could cost a fortune later in CGT.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

Viewing 4 posts - 1 through 4 (of 4 total)

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