Hi, great forum everybody. Some fantastic and well-informed advice on here.
My situation:
– My wife and I currently own a property that is our PPOR.
– We have just purchased a new property with a long settlement and will move into this property in mid-July 2011.
– We are considering moving into my parents place at the start of April and doing some minor renovations / improvements to our current PPOR, then assuming the improvements take a month or so we'd be renting this place out from early May.My questions:
1) If we move into my parents, does our current property qualify as an IP immediately after we move out (ie – so we can claim the interest as a tax deduction from the start of April?).
2) If the answer to 1) is yes, how do we prove that we have moved out? Is a mail-redirection enough? Because we will only be at my parents for a short amount of time, we really don't want to have to go through the process of changing address details on every single thing twice (once is enough!)
As both of our incomes are relatively high, and is the mortgage on our current property, any strategy we can employ to maximise our deduction for the 2011 financial year will make a fairly significant difference.
Thanks in advance for the advice.
1. I think you will have to wait until the property is available for rent before claiming anything.
2. You shouldn't have to prove you have moved out. You will be getting rental income and declaring it that should be enough.
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
Edge3183 wrote:My questions:1) If we move into my parents, does our current property qualify as an IP immediately after we move out (ie – so we can claim the interest as a tax deduction from the start of April?).
2) If the answer to 1) is yes, how do we prove that we have moved out? Is a mail-redirection enough? Because we will only be at my parents for a short amount of time, we really don't want to have to go through the process of changing address details on every single thing twice (once is enough!)
As both of our incomes are relatively high, and is the mortgage on our current property, any strategy we can employ to maximise our deduction for the 2011 financial year will make a fairly significant difference.
1. My reading of rental property guidelines about deductibility suggest the property must be available for rent. Note this doesn't necessarily mean it is rented just available for rent. You'll be able to use any agreement you take out with a property manager as proof.
2. Your mail can be easily handled with a redirection order which can be organised at the post office. Put your folks address on one submission and then the address of your new house on the second one.
Maximising tax deductions can be achieved by gfetting a depreciation report done and secondly paying interest in advanced for the property in June. Be a little wary of this as you still need to have a 'business reason' for paying interest in advance.
My questions:
1) If we move into my parents, does our current property qualify as an IP immediately after we move out (ie – so we can claim the interest as a tax deduction from the start of April?).
YES! As soon as this property is no longer your PPOR and is available for rent it becomes tax deductible as an IP.
I hope this has been of benefit to you.
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