[brunowaParticipant@brunowaJoin Date: 2008Post Count: 27]

March 3, 2015 - 9:53 pm

Thanks all.

I’m still confused though. Based on the clause that Terry mentioned, does that mean I should only be paying CGT on that initial 3 months where there was a tenant from the lease rolled over from the previous owner? Even though it was rented out again after I had lived in it for a year?

• This reply was modified 9 years, 2 months ago by  brunowa.

[brunowaParticipant@brunowaJoin Date: 2008Post Count: 27]

March 3, 2015 - 7:33 pm

Hi Terry, thanks for reply.

Yes, my accountant said I can claim a partial exemption for the 1 year that I lived in it but that is it… I can’t claim the time I was over in London or afterwards. Whereas if I moved in straight away I would be 100% Capital Gains Tax Exempt for the full ownership period.

[brunowaParticipant@brunowaJoin Date: 2008Post Count: 27]

November 18, 2010 - 11:48 am

Thanks Den,

Appreciate your response. The vacancy rates and interest rates can be easily altered to identify different scenarios..

I was more hoping to get a feel for the methodology I am using in working out whether an investment is worthwhile and that my method of calculating the tax deductions and net position is correct.

[brunowaParticipant@brunowaJoin Date: 2008Post Count: 27]

November 18, 2010 - 8:02 am

Appreciate that.

But back to my original question, any thoughts on my method for calculations? What do people do differently?

[brunowaParticipant@brunowaJoin Date: 2008Post Count: 27]

November 17, 2010 - 9:10 pm

Please explain? How do you exclude interest when interest repayments are one of the biggest factors in property? Similar to tax

[brunowaParticipant@brunowaJoin Date: 2008Post Count: 27]

November 16, 2010 - 9:03 pm

Agreed Catalyst… I'm learning the expensive way!

Richard, I am single and own the property in my name only.

[brunowaParticipant@brunowaJoin Date: 2008Post Count: 27]

November 16, 2010 - 11:53 am

Damn that is quite annoying…

The reason I asked the question is that my PPOR at the moment is the property where I have paid down loan to $300k, however I would like to buy a new PPORy to live in and then rent out my current PPOR.

Is there a better method of doing this or is that extra $180k locked away in my current PPOR?

[brunowaParticipant@brunowaJoin Date: 2008Post Count: 27]

November 6, 2010 - 3:38 am

I see.. so putting away all my funds in my 100% offset is not ideal. With the 70k I have in the offset account this should all go straight into the loan on my PPOR, paying it off (leaving some $ for emergency/living funds ofcourse). Then when I need access to this, for eg share investments or deposit for IP, I apply for the LOC.

Understand.

[brunowaParticipant@brunowaJoin Date: 2008Post Count: 27]

November 6, 2010 - 12:44 am

Thanks Richard/Terry, great advice.. its things like this (tax benefits) which I am yet to fully understand so I appreciate the responses.

In saying that, I should be able to use the equity in my PPOR (approximately $180k) to take out a LOC and use it for the deposit and acquisition costs of my first IP, and the interest paid on this LOC is tax deductable. I can then take out another 'normal' loan against the IP to cover the remainder of the property. So I would have 3 loans in total (PPOR 350k, LOC 180k, IP 320k… assuming a 500k IP purchase).

I am yet to fully understand LOC loans, do these have options of interest only or principal and interest and would the intention be to pay this off? If so with what funds? As I am currently paying IO on my PPOR and the new IP would be negatively geared. Hence why I was assuming it is better to use my cash as a deposit rather than increasing my loan amounts when cash flow is tight?

Terry, interesting advice, it's new to me. I always thought it better to NOT pay off the loan on the PPOR but build up funds in my 100% offset account so I would have access to my 'equity'/cash immediately to use for future purchases. What I understand you saying is that it IS better to put the money into the PPOR and then access these funds through the LOC which gives the benefit of tax deductions for future interest payments? It's effectively transfering funds from a non-deductable loan to a deductable loan.

[brunowaParticipant@brunowaJoin Date: 2008Post Count: 27]

December 11, 2009 - 7:00 am

Thanks…

and how does it work if I do rent out one room in terms of tax deductions and capital gains? This is my plan.

1) Live in property 6 months get FHOG.
2) Then rent out one bedroom at $200 per week for 5 years
3) After 5 years, rent out whole apartment and I'll buy another PPOR.

Firslt, current repayments are $2000 and so at $200 rent per week do I have to pay tax on that or because its negatively geared no tax? And the remainding $1,200 per month is this all tax deductable from my normal income tax?

Secondly, how does capital gains tax get calculated in this situation if I rent out only one bedroom for 5 years?