Hi We have just purchased a rural property that is currently rented for $290 per week. We plan on moving to this home but have to sell our current home. So for a while we will be struggling with two mortgages for a while. I believe if we negative gear the new property then the difference between what we collect in rent and the interest payments is taxdeductable. fully or partially? Another scenario is that the renters may move out before we are ready, leaving us with the dilema of moving in to the new hose and renting out our present home even though it is up for sale. As well as losing the negative gearing advantage, will that then leave us with the problem of capitol gains tax on our home once it does sell. Any ideas and advice would be greatly appreciated.
Hi there Waylo1, welcome!
Ok, let me preface by saying I am not an accountant, so this is just from personal experience… You can claimed all the money spent on holding the property (expenses) including interest, rates, management fees etc, above and beyond the rent received (income). You can also claim the costs associated with the purchase (pest inspection, conveyancer, etc).
You may also be able to claim depreciation on any new items in the property for the duration of the tenancy – was the kitchen newly renovated or a new shed put on the property prior to you buying it. Alternatively, if there is anything you plan to improve and are in the position to do so, maybe weigh up the option of doing it now so you can depreciate it for a while.
You will not pay capital gains tax on your home should you need to rent it out prior to selling unless it is rented out for longer than you lived iin it, and should that ever happen you can apply to transfer the cgt to you current home and then provided you live there for 7 yrs you will still avoid it! CGT is very confusing – trying to get a straight answer about our particular situation showed me that.
I would strongly suggest getting a good accountant who invests in property.
Good Luck with it all
soniar wrote:Hi there Waylo1, welcome!
Ok, let me preface by saying I am not an accountant, so this is just from personal experience… You can claimed all the money spent on holding the property (expenses) including interest, rates, management fees etc, above and beyond the rent received (income). You can also claim the costs associated with the purchase (pest inspection, conveyancer, etc).
You may also be able to claim depreciation on any new items in the property for the duration of the tenancy – was the kitchen newly renovated or a new shed put on the property prior to you buying it. Alternatively, if there is anything you plan to improve and are in the position to do so, maybe weigh up the option of doing it now so you can depreciate it for a while.
You will not pay capital gains tax on your home should you need to rent it out prior to selling unless it is rented out for longer than you lived iin it, and should that ever happen you can apply to transfer the cgt to you current home and then provided you live there for 7 yrs you will still avoid it! CGT is very confusing – trying to get a straight answer about our particular situation showed me that.
I would strongly suggest getting a good accountant who invests in property.
Good Luck with it allThanks sonia That’s exactly what I needed to know cheers
Hi,
You might also want to check out the relevent tenancy laws in your state regarding renting out your ppor and having it on the market at the same time. I know in QLD if you want to rent a property out that is up for sale, you must disclose to the prospective tenants that it is up for sale, which can put tenants off – they dont want to rent a property that could be sold underneath them.
But if you take off the sale market and just rent it – then you have to wait 2 months into the tenancy before you can put it back up for sale. Like I said that is in QLD – so it would be best to check. – Good luck and enjoy the ride of investing888Genie wrote:Hi,
You might also want to check out the relevent tenancy laws in your state regarding renting out your ppor and having it on the market at the same time. I know in QLD if you want to rent a property out that is up for sale, you must disclose to the prospective tenants that it is up for sale, which can put tenants off – they dont want to rent a property that could be sold underneath them.
But if you take off the sale market and just rent it – then you have to wait 2 months into the tenancy before you can put it back up for sale. Like I said that is in QLD – so it would be best to check. – Good luck and enjoy the ride of investingHad a cousin in QLD finally find a house to rent. Just got settled and the land lord put the property up for sale. Thanks for your comment
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