Hi,
I bought an apartment for $280k as an "off-the-plan" purchase in Apr 2009, which is to be completed by Dec 2010.
Since I didn't intend to move elsewhere, I was going to make it as my PPOR and get both benefits of FHOG ($21,000 inc the boost) and statp duty concession (about $8k) (ie. I was going to live there at least 1 year or so).
In fact, I have applied and granted for the stamp duty concession already, but I did not yet apply for the FHOG since I can only do it at the settlement of the property at the very earliest.
However, during I wait for this property to be completed, my current job contract finished and I recently got a "dream" job offer (about $90k pa) from the other state.
I have to decide whether I accept or decline the job offer and move out of this state, which means I might have to give up FHOG + stamp duty.
Note that the property in building now is worth $300k as I have asked the sales person.
When I accept the offer and move by Sep 2010, I have 3 months to choose three options:
1. I sell the property now and forget about FHOG ($21,000) and stamp duty concession. Since the property is now $300k, I can earn about $5k ($20k price difference – $8k stamp duty – $7 saling cost). Do I have to pay CGT for $5k? at what rate?
2. I can buy the property with all the benefits of FHOG ($21,000) + stamp duty concession ($8k) by dec 2010. Then I can choose the following options:
2a. Leave it empty for the first 12 mths then rent it out! (since I have a job in the different state, it is clearly illegal so I don't want to do it…)
2b. Rent it out for 11 months, then if I decided to come back to this state, then I can live there for 6 months and everything is fine. (Can I use negative gearing for this 11 mths of period??)
2c. Rent it out for 11 months, if I cannot come back I can sell it and pay back FHOG and stamp duty (I might be able to sell it at higher than $300k by then. Also, I have "utilised" $30k of free money). However, I might not be able to get future FHOG of $7k when I really can claim it.
3. I can but the property without all the benefit and make it my first IP. This way, I can claim FHOG when I purchase the new house in the new state and as well as negative gearing benefits (tax deduction). However, I will never get $21k FHOG and with current rate of $7k, I basically lose $14k to start with……
Please help me what to do if I have any other option!!!!!!!!
Also, if I make it into a proper IP, what actually happens with CGT?THANKS in advance!!!!
S
Hi goodboy
Firstly welcome to the forum and I hope you enjoy your time with us.
Couple of comments below:
1. I sell the property now and forget about FHOG ($21,000) and stamp duty concession. Since the property is now $300k, I can earn about $5k ($20k price difference – $8k stamp duty – $7 saling cost). Do I have to pay CGT for $5k? at what rate?
CGT will be paid at your highest marginal Tax rate for the Tax year you sign the sake contract ie. Sign a Contract In Jan 2011 and the Capital Gain will be added to your income for the 2010/ 11 Tax year.2. I can buy the property with all the benefits of FHOG ($21,000) + stamp duty concession ($8k) by dec 2010. Then I can choose the following options:
2a. Leave it empty for the first 12 mths then rent it out! (since I have a job in the different state, it is clearly illegal so I don't want to do it…) Disgree. If you purchased the property as a PPOR with every intension to occupy the property then i cannot see any reason why you cant still nominate the property as a PPOR even though you are working in another State subject to you not buying another PPOR. I have many clients who own a property in say Brisbane but live all week in the mining areas and occassionally come back to Brisbane. It all boils down to the original intent.
2b. Rent it out for 11 months, then if I decided to come back to this state, then I can live there for 6 months and everything is fine. (Can I use negative gearing for this 11 mths of period??)
Yes for the period the property is deemed as a rental property you are entitled to lodge a claim for the deductions.2c. Rent it out for 11 months, if I cannot come back I can sell it and pay bac k FHOG and stamp duty (I might be able to sell it at higher than $300k by then. Also, I have "utilised" $30k of free money). However, I might not be able to get future FHOG of $7k when I really can claim it.
You might wish to check the Stamp Duty concession as often this varies from the FHOG conditions and differs for each State,3. I can but the property without all the benefit and make it my first IP. This way, I can claim FHOG when I purchase the new house in the new state and as well as negative gearing benefits (tax deduction). However, I will never get $21k FHOG and with current rate of $7k, I basically lose $14k to start with……
True
Whichever way you go i would ensure the loan is interest only with 100% offset account attached as clearly the eventual use of the property is unknown and you will need loan flexibility.
Richard Taylor | Australia's leading private lender
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