I have joined this forum recently and very new to property investing .I feel I would benefit by the opinion of the experienced members if any one is willing to advice me on this.
I had to move away from my PPOR(valued about 450,000) recently in Brisbane and rent a new place up north for 350 a week. Due to work circumstances I will be renting for the next 2 years as I have to move frequently in this time, from 1 place to another. I was lucky to get new tenants soon and have placed my place on rent for 450 a week, which more than likely I will keep renting as I do not intend to go back and stay in this house even if I have to move to Brisbane in future. My PPOR is jointly owned by me and my wife bought at 395,000and has still about 300,000 left on the mortgage.
This place requires some work to be done as repairing of the deck boards, and tiles below the deck which I got done prior to renting but after shifting out from the house myself. A few maintenance things still need to be done as a door lock may need change , the TV connecting point may need repair , change of carpets /ripping them off and polishing the floor board and finally painting the walls and outside. Now my queries are
1. When do I change my PPOR to an investment property, is it now or when I buy a new place in which I intend to stay.
2. Is it better to get the repair work done while this is a PPOR or an investment property? 3. Do I need to get the valuation of my present PPOR done now or when I turn it into an investment property?
4. As my wife is not working , but will now get an income and will have tax to pay , how will this effect usWith regards
PK1
Your property becomes an investment as soon as it is available for rent. ie you can start claiming deductions. You can still treat it as your main residence for up to 6 years and have it CGT exempt in certain circumstances.
It shouldn't matter when you do the repairs as the damage was existing. Depending on the nature of the repairs you may be able to claim the depreciation of the building works. eg if you replace the deck.
You don't really need a valuation, but it may come in handy at a later date if your circumstances change. You should do it when the property is available for rent.
Although your wife will have rent coming in this is likely to be totally offset by the expenses and she may have a net loss which can be carried forward to offset future profits.
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
PK1 wrote:I have joined this forum recently and very new to property investing .I feel I would benefit by the opinion of the experienced members if any one is willing to advice me on this.
I had to move away from my PPOR(valued about 450,000) recently in Brisbane and rent a new place up north for 350 a week. Due to work circumstances I will be renting for the next 2 years as I have to move frequently in this time, from 1 place to another. I was lucky to get new tenants soon and have placed my place on rent for 450 a week, which more than likely I will keep renting as I do not intend to go back and stay in this house even if I have to move to Brisbane in future. My PPOR is jointly owned by me and my wife bought at 395,000and has still about 300,000 left on the mortgage.
This place requires some work to be done as repairing of the deck boards, and tiles below the deck which I got done prior to renting but after shifting out from the house myself. A few maintenance things still need to be done as a door lock may need change , the TV connecting point may need repair , change of carpets /ripping them off and polishing the floor board and finally painting the walls and outside. Now my queries are
1. When do I change my PPOR to an investment property, is it now or when I buy a new place in which I intend to stay.
It has to be advertised on the rental market as being available to rent.
To be classed as an investment property to be able to claim repairs.
PK1 wrote:2. Is it better to get the repair work done while this is a PPOR or an investment property?
it has to be advertised on the rental market as being available to rent. It is better while investment property doesn't need tenant in it necessarily if it is available to rent.
PK1 wrote:3. Do I need to get the valuation of my present PPOR done now or when I turn it into an investment property?It makes it easier to work out any future capital gains tax if you sell it later on in the future, if you get a valuation done when it changes status from PPOR to Investment Property.
PK1 wrote:4. As my wife is not working , but will now get an income and will have tax to pay , how will this effect us
If you owe as much as you do then most likely property will be making a nett loss which your wife can not claim but can accumulate so as to claim later in the future.If it is a positive income after expenses then it would need to be $12,000 before your wife was taxed due to $6000 tax free threshold unless your wife is not a resident as no tax free threshold for non residence tax payers.
if you change the carpet it will most likely be regarded as an improvement rather thana repair and only depreciation can be claimed. This is due to the entire change law that regards an item being changed in its entirety as an improvement rather than a repair.
Dear Terryw and duckster thanks a lot for your reply.
Terryw you have mentioned about CGT exempt in certain circumstances what are they.
PK1
http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s118.145.html
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
Thanks Terryw , the link was very informative
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