Hey there.
im new to all this and i couldnt find a post that deals with a similar situation.
I have a unique opportunity to house sit for a family member for 2 years freeing up my place to be rented out.
Just wondering where i would start the proces and is it worth renting out the house or would it be best to just sell?
Id rather keep the place but im seeking advice. Should i contact a fimancial planer to discuss options.
Would there be taxs on rent gained?Hi Zeusrumble,
What a great opportunity! Whether to rent or sell would really be dependent upon your financial situation. There are some real benefits to renting the property out though. Obviously there is the rental income which should cover at least part of the mortgage repayments which is always helpful. The rent you receive will be taxed as assessible income. This is where it becomes important to maximise the deductions available as a property investor, to keep your assessible income, and therefore your tax, minimised. One of the best ways to do this is to have a Tax Depreciation Schedule prepared by a professional quantity surveyor. Depreciation is a deduction you can claim for the gradual wear and tear of your property over time, and is in addition to all the standard expenses that are deductible, such as mortgage interest, repairs and maintenance on the property, management fees etc.
I recommend doing some reading to help you further understand what it means to have an investment property. I can recommend Michael Yardneys "How to grow a multi-million dollar property portfolio", even if you aren't looking to do that, it gives some great explanations about what it means financially to invest in property.
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cheers,
Leah Wilkins
Capital ClaimsLeah Wilkins | Capital Claims Tax Depreciation
http://www.capitalclaims.com.au/
Email Me | Phone MeBenefits you appreciate.
Think i can afford it and id rather rent and use the rental income to get more capital up for purchasing another investment property
just not sure who i contact. Obviously a real estate agent to handle the rental side of things but ither than that do
i need to contact an accountant to see what taxbreaks i can claim or would i be best of contacting a financial plannerRent Vs sell
Hi
If you rent it you can sell it later..
if you sell it – its gone!
Id get it on the books with the RE this FY if possible?
Sort out the rest after its all settled, depreciation, tax etc etc with an accountant
After that if your going ok with it all i'd see a Fin Ad about where to go from there..
zeusrumble wrote:Think i can afford it and id rather rent and use the rental income to get more capital up for purchasing another investment property
just not sure who i contact. Obviously a real estate agent to handle the rental side of things but ither than that do
i need to contact an accountant to see what taxbreaks i can claim or would i be best of contacting a financial plannerHi Zeus
It’s pretty straight forward.
As you’ve already mentioned, you can engage a real estate agent to take care of the management (they will charge a percentage of the rent – depending on the area it could be anywhere between 5% to 10%).
Set-up a simple excel spreadsheet to track your income (rent) and expenditure (interest portion of loan repayments, property management fees, rates, landlord insurance, etc). There are a number of deductions you can claim – a quick google search should reveal some lists of deductible expenses. At the end of the financial year, take your spreadsheet to your accountant.
I’d recommend you take out landlord insurance for the two years (a quick search on this forum will provide heaps of info on companies offering this service).
It sounds like a good opportunity.
Cheers
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]
Wow, what an opportunity! Would definitely rent seeing as (correct me if i’m wrong) you won’t be paying rent at the place you’re house sitting, so definitely opportunity to earn some rental income there! From what i understand, income tax may be payable on the rental income earned, however any mortgage repayments may then be tax deductible, because in effect your place becomes an investment property!
Definitely seek advise from an accountant about this. My experience with financial planners is they don’t really deal in property as its not a product on their list to recommend on. Think an accountant would be most appropriate in this circumstance. Good luck!Hassassin wrote:From what i understand, income tax may be payable on the rental income earned, however any mortgage repayments may then be tax deductible, because in effect your place becomes an investment property!Yes – it would just be treated the same as any investment property that’s why it’s important to track income and expenses.
Cheers
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]
Biggest issue i am having currently is getting a real eastate agant to actualy respond to my messages
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