Hi all, bought my first property last week! Got the keys yesterday and i’m over the moon!
Now just want to ask all you experienced folk..I can’t lose with a water view right? My place(how proud!) is situated in a nice suburb in NSW’s Lake Macquarie…the house itself is nothing flash but i really like it because it’s situated one lot behind the waterfront houses, and from the front deck I get a great view of the lake. Also there’re a lot of new houses going up, most of them are huge millionaires’ houses. Reason why i asked this question is because the rental return is CRAP! Place cost me $415000 but potential rental is a measly $250/w. But i bought this place with CG in mind. Comments please!
speak to u soon Jo…
Brenda: i got about $20000 cash but that’s for a deposit for my next one! hehe…it’s gonna be TIGHT for the 1st 6 months(living in it to get the 1st home buyers grant) have to cough up $2300/month!
Lucifer: don’t really get your post…i’m pretty dumb when it comes to figures…i know cash flow is really BAD but like i said before i got CG in mind.
Congratulations on your purchase – yes it will be negative cashflow but given the water views you should do well in the long term.
Without knowing your salary etc it is hard to provide much in the way of concrete comment but you can assist the cashflow situation by placing the $20K in an offset account – this will have the effect of reducing your monthly interest bill.
When you do move out you will be able to apply for a PAYG variation to your pay period tax – a depreciation schedule will also help this if appropriate. These will help your cashflow. Convert loan to I/O as soon as you possible can.
You maybe able to give the place a bit of a cosmetic renovation (paint and patch up) to improve your cashflow with a higher rent return after vacating.
And finally – it is not a race so I would advise you ‘bed this one down’ first before moving onto something else.
A PAYG variation can only be completed when you rent the property and it allows you to claim your tax refund every pay period rather than waiting until the end of the financial year while, in the meantime, you are on bread and water.
See the following links – they may be of assistance.
yeah derek you’re calculations are correct! Extremely tight for the first 6 months…repayment is $2300/m i earn approx $3000/m after tax. So $700/m to live on…good thing is i don’t pay rent, only expenses are food, petrol, bills.
But I did some research and apparently
I can rent out the other rooms during the compulsory 6 monthes of residence! So that will ease the squeeze a bit. Now i want to ask how do i declare the income from the rent of my spare rooms?
Can I just keep a book and get the tenants to put a signature in every week after they’ve paid me rent?
Yes either a rent book or some other form of record to show that you have received income from boarders, which you can produce for your accountant or tax agent when it comes time to lodge your return.
Bear in mind also, that as you are going to be renting out some of the rooms, even whilst it is your PPOR, should you ever decide to sell the property, CGT will be applicable and apportioned accordingly for the period of time in which the premises generated income.