Hi all found this site to today and thank god as so far I can see I will learn heaps.
My question is this. Last July my ex and I bought a house together out at Quakers Hill. The home is an older home built around 1981 – 1983. My question was I was thinking to rent it out move back home with my folks for a bit then move back into the house and have a friend board with me. Given the age of my house do you think having a depreciation report would be worthwhile and does it make a difference if I rent the house out for 6 – 12 months as far as tax is concerned?
Thanks and look forward to learning
G
My understanding is that after 1985 there isn't anything claimable on the building under deprecaiation (although someone else might corret me here) but if you've made capital works or additions to the fixtures and fittings theses would be. I'd guess little benefit would come from the cost you'd pay for the schedule.
With regard to the tax implications, you will have decutions available based on the interest repayments less the rental income you receive when you move out to make it an investment property and are defintiely worth considering.
The building cost itself can't be depreciated if constructed prior to July 1985 (residential) or July 1982 (non-residential). However legislation allows all plant and equipment to be given a new effective life from settlement date and is depreciated at various rates generally ranging from 5% to 20%. This is available for any investment property regardless of age and covers such items such as floor coverings, blinds, water tanks, air-conditioning and white goods etc. A depreciation report is always worthwhile.
I'm tipping it would be worth it.
I had a $220 depreciation schedule prepared for a 40 year old, 3 bedroom IP in Wagga Wagga. I'm able to claim $2,100 in the first year. This more than pays for the $220 report.
You could use a free online depreciation schedule to gauge how much you'll be able to depreciate in the first year.
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Remember that you have 6 years to move back into the house, after which you can sell it CGT (capital gains tax) free (that is only relevant if you actually decide to sell). Otherwise, you'd be subject to CGT, which would be on 50% of the gain, if you've held the property for more than 12 months.
Take a look at the land you're sitting on. A couple of things you could do if the lot size is large are:
Build another dwelling in the backyard and rent that out too
or
Could you subdivide it into two lots? Sell one and keep the other, or sell both?Check with council on the rules and regs for that area if you think you might go down either of these paths.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
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