Tax structure for a Duplex

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Kenten
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@kenten
Join Date: 2009
Post Count: 17
May 8, 2009 - 9:59 am
G, Day Everyone
Just applied to the council to see if I can convert my PPOR into a Duplex. My PPOR is single story with three bedrooms on one side and two on the other both sides fully self contained. Bought the house in 2005 for $240000 recently valued at $440000 – borrowed $196000 to purchase the property. I now have a line of credit loan maxed out at $270000. The house is 50/50 in both myself and my wifes name. If the council approves our application we would live in the 3 bedroom side of the duplex. The two bedroom side of the duplex would have an approximate value of $200000. Have spent approx $9000 reno;s on the side of the house with 2 bedrooms. my questions are for tax purposes could I put the 2 bedroom duplex in my name only without paying stamp duty and could I claim the interest on the full amount borrowed ( $196000) to the two bedroom duplex and can I claim depreciation benifits straight away.
Thank you – Kenten
Scott No Mates
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@scott-no-mates
Join Date: 2005
Post Count: 3,856
May 9, 2009 - 3:43 am
You'd be best advised to speak to both a QS & your accountant – QS for your depreciation schedule and your accountant regards to the proportion that you can attribute to the duplex (hint it will not be 100% of the loan and may be somewhat less than 50%).
Depending upon that state that you live, it may be possible to transfer the property between spouses however that is becoming rarer. Your claimable depreciation will start when you declare that the property is a rental eg after DA/CC works are complete (if there are any works required to fire isolate the two premises).
Kenten
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@kenten
Join Date: 2009
Post Count: 17
May 9, 2009 - 5:07 am
Thanks for your advice Scott
Terryw
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@terryw
Join Date: 2001
Post Count: 16,213
May 9, 2009 - 11:37 pm
Hi Kenten
I don't think you can transfer into your name without stamp duty – unless you divorce maybe!
As for the loan, the ATO will look at what the funds were used for. Was the whole $196k attributable to the investment portion? Probably not, maybe half or a bit more if you can say you borrowed funds to do the sub-division and some reno costs.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au