Hi!
I am a first home buyer, I live in St Kilda and obviously can't really afford to buy in this area without giving up my current lifestyle
. I have been playing with the idea of buying a place in geelong as a first home but don't really want to live in it, but would rather rent it out and cover the balance. What are the implications of this tax-wise, is it a good idea? I am a rookie!If your careful.. it could be a very effective approach, tax wise.
However, you'd have to "move in" (think furniture, utilities, mail, etc) for the first 6 months. This would give you 2 advantages:
1- you'd be eligible for the $7000 FHOG – which will go a long way towards the rent that your not getting, and
2- thereafter you can extend the principle place of residence exemption for capital gains tax for 6 years,Then, whilst the property is rented it will be negative geared, so the taxman and your tenant will help you pay off the house.
Mr5o1 wrote:If your careful.. it could be a very effective approach, tax wise.However, you'd have to "move in" (think furniture, utilities, mail, etc) for the first 6 months. This would give you 2 advantages:
1- you'd be eligible for the $7000 FHOG – which will go a long way towards the rent that your not getting, and
2- thereafter you can extend the principle place of residence exemption for capital gains tax for 6 years,Then, whilst the property is rented it will be negative geared, so the taxman and your tenant will help you pay off the house.
Thanks for the above answer. I am trying to approach getting into the property market with a fair amount of caution since I don’t want to become an absolute slave to the bank as much as possible
I think I am about a year off buying something as I want to have at least 20% deposit. I am going to be looking into your above comments as they sound pretty positive.
A second question I have is about where to buy. I’m not really fussed and don’t want to make an emotional purchase. I’ve been thinking that Geelong is good option but wonder if any other areas around Melbourne have growth potential over the next 10 years or so? I am looking to spend no more than 350,000 max but would prefer around 300,000 or less.
Any suggestions?
2morroW wrote:A second question I have is about where to buy. I'm not really fussed and don't want to make an emotional purchase. I've been thinking that Geelong is good option but wonder if any other areas around Melbourne have growth potential over the next 10 years or so? I am looking to spend no more than 350,000 max but would prefer around 300,000 or less. Any suggestions?Well.. your the only one who can really decide, there's a plethora of books and other resources to help you chose what sorts of area will enjoy good capital growth.
That said, your already on the right track, it's wise to realise that you should try to be fairly calculating and unemotional about it. Just keep in mind that in your case, the property really does need to be somewhere near melbourne, because whilst no one will ever knock on the door just to confirm your actually living there, it really does need to be conceivable that you do live there.
You wouldn't be the first person who's tried to represent to the ATO that their PPOR is in sydney, but their tax return shows they have a full time job in melbourne.
Thanks, I’m thinking the same thing
I guess I will have to start looking and doing the math!
. I have been playing with the idea of buying a place in geelong as a first home but don't really want to live in it, but would rather rent it out and cover the balance. What are the implications of this tax-wise, is it a good idea? I am a rookie!
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