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  • Profile photo of lookinginvestlookinginvest
    Member
    @lookinginvest
    Join Date: 2011
    Post Count: 1

    Hello All,

    I'm still new to the investing game. I read some months ago an article in the Australia Property Investor (API).

    The article was about Natalie Cook the Olympic gold medalist and it specifically spoke about and I quote "So rather than living in a home that she owns, Natalie now rents her PPOR".

    It goes on further to say and i quote "My new strategy is to never buy the house that I live in," she says.

    So my question is how would one achieve this? Would it be through an investor setting up a property investing company / trust and having that buy the house and then rent it from the trust or company? I would expect that certain legal tax structures which would be seen by the ATO as being acceptable would have to be setup.

    I understand that I would need to seek legal and accounting advice.

    I welcome advice from all who are a lot more experienced in the investing game and thank you for your time.

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    Hi there

    Welcome to the forum.

    Maybe she's simply renting (as opposed to owning) the home she lives in? I have a few investor clients that do this – they rent where they want to live while owning multiple investment properties in other areas.

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of PaulliePaullie
    Member
    @paullie
    Join Date: 2009
    Post Count: 217

    I don't think thats what shes doing.

    What she is doing, is buying property, renting them out and renting out another property to live in, a property not her own.

    Profile photo of WattoetteWattoette
    Member
    @wattoette
    Join Date: 2011
    Post Count: 19

    Correct me if I am wrong but I have heard you can rent your PPOR as a property investor and the rent can be a tax deduction !! Can this please be confirmed.

    I have also heard a lot of investors rent their PPOR as it is cheaper to rent in certain areas than buy and you can afford to live in a more prestigious house without the expense of maintaing this property. Not sure if it is a good idea or not, I guess it would come down to individual financial sitiuations.

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069
    Wattoette wrote:

    Correct me if I am wrong but I have heard you can rent your PPOR as a property investor and the rent can be a tax deduction !! Can this please be confirmed.

    Hi Wattoette, weclome to the forum. The answer to your question is no – it's not possible.

    Wattoette wrote:
    I have also heard a lot of investors rent their PPOR as it is cheaper to rent in certain areas than buy and you can afford to live in a more prestigious house without the expense of maintaing this property. Not sure if it is a good idea or not, I guess it would come down to individual financial sitiuations.

    Yep, some do it. It's often a lifestyle choice – rent in the area you want to live in and invest elsewhere.

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of eilatan28eilatan28
    Participant
    @eilatan28
    Join Date: 2010
    Post Count: 44

    hi wattoette,
     i read that same article, and i think it WAS about her now choosing to rent where she lives as apposed to having a massive mortgage herself.  that way, she has a larger amount of money available to fund other investment properties. – a common strategy used by some if they are happy renting themselves.

    for your other question – do you mean renting out part of your PPOR while you are still living in it yourself ?? or renting out the entire house to another party?? My understanding is that if you are still living there yourself and renting out a room then only a percentage of the interest on the loan is tax deductible. and i believe this scenario can get really messy come tax time  ?? may be wrong, but we have done the second scenario ourselves – we rent out our entire PPOR while we choose to rent in another suburb. – The entire amount of interest charged is tax deductible, AND our PPOR remains CGT exempt while we continue to rent!!   best of both worlds!!!
    happy investing! hope that helps

    Profile photo of JT7JT7
    Member
    @jt7
    Join Date: 2010
    Post Count: 286
    eilatan28 wrote:
    but we have done the second scenario ourselves – we rent out our entire PPOR while we choose to rent in another suburb. – The entire amount of interest charged is tax deductible, AND our PPOR remains CGT exempt while we continue to rent!!   best of both worlds!!!
    happy investing! hope that helps

    Hi Wattoette,

    eilatan28 is on the money here.

    We also use this strategy of renting out our PPOR and as eilatan28 correctly states the entire loss on that property is tax deductible. Our PPOR also remains CGT exempt for a period of 6 years. It’s a very useful strategy.

    JT7

    Profile photo of eilatan28eilatan28
    Participant
    @eilatan28
    Join Date: 2010
    Post Count: 44

    thanks JT7 – i forgot to mention the 6 year thing!!

    Profile photo of WattoetteWattoette
    Member
    @wattoette
    Join Date: 2011
    Post Count: 19

    Thanks eilatan28 & JT7,

    I thought I had read something along those lines but could not remember the exact way that it worked.

    Cheers for the info  

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