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Thanks for your reply Benny,
Yes currently 60k after costs which I realise is a good position. And no I am not schooled in shares. I would have an expert help on that fo not. So you are probably thinking I’m a bit mad perhaps! I just thought shares were give me a more diversifIED portfolio. Less risk. Spread the money into different areas. The motel is putting all my eggs in one basket. If something goes wrong (unlikely but possible) that it could be a big problem to deal with.
An no I don’t have any expenses myself. The motel is maintained by the leaseholder. So yes it is a no passive income, but shares would be even more passive I feel.
There also might be a ‘retirement advantage’ in 25 years to sell the property but as it is a commercial property and laws might change in 25 years I’m not sure I can base a decision on that point of view.Ideally you would live in every property you own initially to establish them as the main residence. Then you have a choice of which to eventually choose to be CGT. But you only have to make this choice on the sale of the first one. You would ideally reconisder each property after 5.5years since you moved out.
Hi terry, sorry to re-visit this. Just trying to make it clear in my mind! I did check the link but it was overly clear in regards to the 6 year rule. In my scenario of buying and living in house A in year 1, and then buying house B 12 months later in year 2 (whilst putting house A up for rent) how does the 6 year rule work out?
You mention 5.5 years in the last statement. Is that because you think I need to sell one of the property’s and decide which of the properties I wish to have the capital gains put against before the exact period of 6 years is up…..Or is it because I need to give myself 6 months breathing space prior to the 6 years to move back into the house which I think will make the most gains and therefore will need to make it my PPOR?….. Or is it because I need to wait for minimum 6+ years to pass to sell?
Or perhaps the 6 rule (whatever it states) isn’t even going to affect me and I should be more concentrating on being resident in each property for 12 months. I think the original comment I quoted on has got me other-thinking things!
Sorry if I haven’t worded the above very well :-/
Ideally you would live in every property you own initially to establish them as the main residence. Then you have a choice of which to eventually choose to be CGT. But you only have to make this choice on the sale of the first one. You would ideally reconisder each property after 5.5years since you moved out.
Thanks terry, so as an example, if I bought house A in Jan 2020, used it as my main residence, then bought house B in feb 2021, and moved into ihouse B as my main residence (and rented out house A), I’d have until mid-2025 to decide which house I would like to consider as my main PPOR before selling one of them?
This scenario is quite important as house A is likely to be an apartment in docklands, Melbourne (an area which is completely over developed, but possibly undervalued) and the second house will be a house on a very big block in rural Victoria.
So it is fair to say, it would be very hard to pick which might rise in value in 5years time, if I wanted to sell up.
Dave, simply you can’t double dip. If you PPOR is house a and you live in and also own house b, the time frame you selected for house a being you PPOR will be used to calculate the CG in house B when you sell it. In saying that if you own house B for 30 years and sold house A 24 years ago I highly doubt there are any tools sophisticated enough to calculate what capital gains tax you owe not to mention the tax man isn’t that well coordinated. Hope this helps.
Hi Tim, yes I understand you theory on time being a good option for the ATO to ignore my situation and they won’t look back that far, but I’m definitely after a legal loophole (not a tax dodge) that I can use to my advantage which might suit my specific circumstances. I’d hate to find out 10years down the line, thee was something I could have done differently to save me lots of money! :p
I’ve made that financial mistake in the past and it cost me a lot (which could have been legally avoided), so now I ask more questions before I jump into to anything! HahaYes still possible. 6 year rule. S118-145iaa97.
But if second house sold it would be partially subject to cgtHi terry, do you have a link about the above 6 year rule. I tried to search it online but can up with nothing. Thanks :)
Thanks for the feedback guyz. Sorry I’m not very business minded, as i’m Just good at running a successful business! The latter normally looks after everything else! :)
Apparently i can put this capital gain/rollover into my supernnuation account. And seeing as i’m Almost 40 years old with only $35,000 in my super account (eeek!) this extra $125,000 will come in very useful!
If anyone has any further info on this super rollover would be great to have a link to something to read. I would ask my accountant but, as a non-business minded person, i already him soooooo many questions its not even funny!! :p
Hi tony, sorry I don’t use the Internet much. I hate it in Fact!! Still plugging away at the idea of leasing. I have had 1 agent down in person who was very helpful. All other agents have failed to return emails and voice messages – very disappointing to be honest. I’m looking to lease start advertise in 12 months time, with a view to sell in 24 months time. What would say is the average length of time a motel is listed for leasehold. I know some motel ores want to get rid of ASAP, and some will sit and wait for the highest price, but there must be an average? I had an offer from a Chinese investor, but trouble is, I would like the motel back eventually, and all they wanted to use it for is bus tours.mso decided that it wouldn’t work. I assume you don’t cover Victoria?
Hi Jo, sorry I don’t get on here much!! Too busy running round after guests. So I have just secured a mortgage. Thought best to set that up now before I lease the motel. I have put off leasing the motel for another 2 years so I can use that time to improve the figures. Given I have no current mortgage on the motel I have been running in a very relaxed fashion…..but that is not a very good way to run a business that you want to sell!!! I have had one agent down in person. They were very helpful indeed and helped me work out a pathway to leasing the place. I will prob lease with them as they have been the only ones to bother returning my messages etc. what about yourself? Any more thoughts? How long have you had your place?
Hi cry, thanks for your response. Yes the rent has been taken out of the 100k. The 100k is just pure profit after wages, motel expenses etc.
I don’t quite understand why if I mortgage the motel, it won’t be tax deductible. The initial money I used to buy the motel (1 mil) was personal savings. This money is just going to be paid back to me. So technically, the money I get back from the motel sale (it will be transferred back as a director loan repayment) will have no affiliation with the personal apartment that I buy in the future?
Thanks for recommending tony. Do you think even if I find another broker (CRE or resort brokers) he will still be able to help. I am happy to pay for the service. I just want to avoid the person giving me advice to be the one who lists my property. I need complete unbiased advice. To find someone without any vested interests in the motel sale would be the best bet, hence why I started on this website first.
Thanks again for your help :) I am at the start of my journey and I know I still have a lot to learn. I hope to get there in the end!
