Recently, I was approved for the first home owner grant. The settlement date of the property would be the end of March. I have a plan to move to the new house next August, and during the vacant period (April – July), one of my friend agrees to rent my property.
Am I still eligible for the first home owner grant if I’ve decided my friend to rent my property for 4 months, and after that I will move to my property continuosly (i.e. August) ??
For tax purposes (capital gains), can I claim the loss that I’m incurred (if the expense of the property is greater than the income that I’ve received) ?? And what kind of legal document do I need to show to the tax officer, that I am doing the business (of renting my property to somebody else) ?? Do I need to form a company or apply for an ABN number ??
Thank’s for your advise.
Originally posted by leo777:Recently, I was approved for the first home owner grant. The settlement date of the property would be the end of March. I have a plan to move to the new house next August, and during the vacant period (April – July), one of my friend agrees to rent my property.
Leo, I am not an expert on FHOG but from the little I do know, the answer is a definite..NO!!! YOU have to live in it otherwise you will be required to payback the grant amount (someone correct me if I am wrong please)No probs Josie. You are wrong with your definite NO. The property can be rented. As long as you take up residence for 6 months within that first 12 months you qualify for the FHOG. This means you can rent it for 11 months and then move in for 6 months and retain the FHOG. If you don’t move in then you need to repay the grant. Hope this helps [blush2]
Am I still eligible for the first home owner grant if I’ve decided my friend to rent my property for 4 months, and after that I will move to my property continuosly (i.e. August) ??
(See above)For tax purposes (capital gains), can I claim the loss that I’m incurred (if the expense of the property is greater than the income that I’ve received) ??
NO…CGT is not about how much income you have made it is about CAPITAL GAIN in value of property from time you buy it to the time you sell it. It might be easier for you to understand if you read up on its definition before you ask these unrelated questions.Example:
Buy house in 2005 = $250,000
Sell house in 2006 = $300,000 or $240,000 (loss)
CAPITAL GAIN = $50,000
CAPITAL LOSS = $10,000 (if you sell for 240K instead of 300K)And what kind of legal document do I need to show to the tax officer, that I am doing the business (of renting my property to somebody else) ?? Do I need to form a company or apply for an ABN number ??
NONE, This is not necessary and makes no sense.Thank’s for your advise.
Am I still eligible for the first home owner grant if I’ve decided my friend to rent my property for 4 months, and after that I will move to my property continuosly (i.e. August) ??Providing you live in it as your “principal place of residence for a continuous period of at least 6 months, commencing within 12 months of either settlement or completion of construction”, then YES, you can still claim the FHOG.
However, if you have told your lending agency (and insurer) that you will be occupying this as your PPOR, they may not take too kindly to you becoming a landlord. Might be worth staying ‘under the table’ on this one and forfeiting any potential -ve gearing tax benefits.[fear]Cheers, F.[cowboy2]
PS – If you follow Enzo of REIV’s logic, that:
CAPITAL LOSS = $10,000
can more positively be described as ‘slightly negative growth’ or ‘more realistic levels of stable capital appreciation’…[biggrin]If you occupy it within the first year and stay in it for 6 months minimum then you are entitled.
You will have a CGT liability for the period it was a rental property unless you occupy it after you buy it.
Cheers,
Simon Macks
Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Originally posted by foundation:
PS – If you follow Enzo of REIV’s logic, that:
CAPITAL LOSS = $10,000
can more positively be described as ‘slightly negative growth’ or ‘more realistic levels of stable capital appreciation’…[biggrin]Foundation,
It wouldn’t exactly equate to 10K as obviously there are other factors that need to be taken into account, and yes, it could well end up as a “stable capital appreciation” HOWEVER for the sake of simplicity I thought it best to not try and confuse the issue too much; as it stands, I still don’t think the message will reach its target!! [blush2]
Cheers,
Jo
You will be still entitled to the first home owners grant, as long as you live in the house within the first year. Go to the government website to find out more details about the grant.
Dear Monopoly, Foundation, Mortgage Hunter, Bomandlouisa and anybody who read this topic.
I need to change my word here. It is not Capital Gains Tax. I understand that I need to sell the property to get into CGT.
What I mean here is “negative gearing”, the loss that I’ve made for my 1st property. For eg. I pay the mortgage $1000 per month, I only get $800 per month from my renting income. It means I made a loss of $200 per month. Can I still claim this loss for the period of April to June (see the 1st message above) in my 1st property ??
Thank’s for the information, guys. I’m really appreciate that.
You can claim tax deductions for the period the propery is available to be rented.
Simon Macks
Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
But if you claim any deductions then you must also exclude that period of time from the primary residence CGT exemption.
Originally posted by Mortgage Hunter:You can claim tax deductions for the period the propery is available to be rented.
Simon Macks
Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Aaah but if you occupy the dwelling then rent it and reoccupy it you can neg gear it for up to 6 years without losing the exemption. As long as you do not own another PPOR.
Simon Macks
Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
True, but then he still has to occupy it first. Renting it out before occupation would not count.
I’m not sure about the deductibility of interest on a primary residence (because it would still be a primary residence vis-a-vis the ATO).
I’m not sure about the deductibility of interest on a primary residence (because it would still be a primary residence vis-a-vis the ATO).
To the best of my knowledge and experience it can be done.
Best to speak to an accountant or the ATO.
Simon Macks
Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
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