I have two units on one one block, both single story. I have lived in the front one for about 15 years. My elderly Mother purchased the rear unit 7 years ago so that I could care for her on a daily basis but live separately. This was a good scenario for both of us.
My Mother passed away in Sept. 2009 leaving me the rear unit. It has taken me some time to get my head around what to do, not having had investment decisions like this to make before.
I have decided to make her unit my PPR and for the present time need to obtain some income from my original home which has never been rented out and is now vacant. I am not working and this would be my main source of income.
I know there are CGT issues which I have not a great deal of understanding of.
I am aware that my inherited property will not incur CGT as it will be my PPR and I have also moved into just before the 2 years of her passing is up.
What I do need help understanding is my CGT implications on my original home.
I am about to rent it out for the first time. Should I pay to get a sworn valuation, as many well meaning friends have given me different opinions? If so, what are the reasons and in this situation is it better to hope for a higher valuation or a lower one?
How will CGT work with this situation keeping in mind that I have lived in this property for the past 15 years and it has risen in value quite substantially since purchase? As I have no other income I need to get this right before I start.
I have just recently spent money on painting and general repairs prior to negotiating with an agent to rent it out. Are these costs claimable? Also what other things are claimable?
Any input from all of you would be much appreciated.
As it has risen substantially in price I'd get an evaluation. It may not go up in price in the forseeable future. If you don't get the valuation, when you sell they will apportion GST as a %.
The repairs are not claimable.
Once you have a tenant any repairs are claimable against the rent.From the time it is available for rent you can claim any expenditures (rates, interest, repairs, management costs etc).
Good luck. Just keep posting if you have any questions.
As you have lived in the property first, CGT will be calculated on the value of the property from the date it first earns income. This is why you need the valuation, as it becomes your 'cost' for CGT purposes.
It would be in your interests to have a higher valuation, as the higher the cost, the lower your capital gain will be when the property is sold.
The repairs you have done are not claimable, as they occurred before the property was available for rent.
Thank you both for your input. I guess I thought I would be told that. Always better to get some other opinions.
I just wasn't sure what I should have been hoping for with regard to a sworn valuation. I understand that higher rather than lower is better when you are selling but I wasn't sure about the renting side of it.
Can you also advise me what sort of money I would be looking at to get a Sworn Valuation and how do I go about finding the right person for the job.
Also would appreciate anyone giving me a guideline to what the acceptable Agents Commissions would be for renting and ongoing management.
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