[2CParticipant@2cJoin Date: 2009Post Count: 3]

April 15, 2009 - 11:08 am

eddiec wrote:

Terryw wrote:

if the renos were done to improve the house that you are going to be making rental income out of, then the interest should be deductible.

I agree with Terry – the interest on the loan in relation to the renovations will become tax-deductible when the property becomes available for rent.  Should also see if you could claim the capital works deduction in respect of the capital expenditure incurred on the renos. 

For future CGT purposes – you are taken to have acquired the property at its market value when it becomes a rental property.  In other words, any value increase in the property from that time to when you sell may attract future CGT.

Eddie
[email protected]

Thanks Terry & Eddie. I will investigate the capital works deductions as I hadn’t considered this previously

[2CParticipant@2cJoin Date: 2009Post Count: 3]

April 15, 2009 - 11:03 am

Qlds007 wrote:

Alternatively, would I be better off transferring the house to myself (higher income) and negatively gearing the full market value ($350K) and wear the stamp duty costs?

This will depend on numourous factors including: Your marginal Tax rate, the State in which the property is located, how long you intend to keep the property, likely purchase price of your new property etc etc etc.

Hi Richard
I am about $5-10K into the 40% tax bracket, in South Australia, intend to hold the property for at least 10 years and looking to spend $400-450K on the new property. I am also mindful that a trust structure may be beneficial/more flexible in the future so I wouldn’t want to pay stamp duty now only to have to pay it again in 5-10 years to transfer it to a trust.
Thanks for your reply
Cheers
2C