Help needed – Two houses stuck in hand

Only from the point in time that you started renting it out till you sell it. So gain achieved in rented time would be subject to capital gains tax.

When you borrowed the 230k the bank would have valued the property at 500k. Keep in  your tax records this valuation report and then anything above this is capital gain when you sell later on.

You can also proportion the capital gain based on time as ppor / total time owned times final capital gain achieved from original purchase price will be exempt. gain that is after this exempt amount is subtracted off is taxed .

Also suggestions from an accountant that rent the old one privately, but named the new one on the rental agreement to claim stamp duty and more tax deduction on interest etc, would this take me into any trouble if ATO find out?

Remember that you sign your tax return declaration that every thing stated is true and correct. So you will be the one explaining to a tax officer why you are defrauding the ATO not your accountant.

You cannot claim stamp duty as a cost against a rental property that is private use (you can borrow the funds needed if the house is for investment purpose)?

You cannot claim a loan that is for the purpose of private use being your main dwelling as your rental investment purpose.

I basically don't want any trouble but attracted by the benefit of the doge way, just how much would I save if I listen to the accountant?

http://www.ato.gov.au/individuals/content.asp?doc=/content/82390.htm

This quote below is directly from

http://www.ato.gov.au/individuals/content.asp?doc=/content/00131327.htm

Interest

People sometimes use their loan facility for both investing and private purposes – for example, to purchase or renovate a rental property and to buy a motor boat.

The interest expense on the private portion of the loan (the motor boat) is not deductible.

You can only claim one main residence at a time- That is if you were living in a house that you owned, you can not claim another house as your PPOR as you can only live in one house at a time. If you move into a house that you owned, that house must be your designated PPOR.

If you do move out into your new house, you will only be able to claim interest on $90k of your loan on your 1st property. Even though your mortgage is $230k, you can not claim interest on the money that you withdrew to fund a deposit on your new house. The ATO looks at the purpose of the loan and not at the security of the loan- so even though you withdrew the extra money and secured this against House #1, because the purpose of this redraw was for House #2 you can not claim the interest as a cost against House #1.

Hope this is clear enough.

And also as a side note- There is no point trying to cheat the tax system. If you get audited and the ATO finds out that you have lied to avoid paying tax, the chances are they will prosecute you for Tax Evasion as they do not look lightly on these matters.

Cheers,
Luke

You can apply for the old house to be regarded by the ATO as your primary residence even when renting it out for CGT exemption for up to six years  however you can only do this on one house at a time. So house number two would be CGT liable while you are treating old house as main dwelling CGT exemption.

http://www.ato.gov.au/individuals/content.asp?doc=/content/36887.htm

Exception to what I typed above
There is also a situation where if you are not renting out the two houses you can have both houses as main residence for up to 6 months
See
moving house section in link below
http://www.ato.gov.au/individuals/content.asp?doc=/content/36888.htm

If you phone the
ATO
on 132861
you will be find them to be very helpful on any inquiry or clarification on what was typed above that you may have.