Hi all, just hoping to get some general feed back on what you all think of this scenario.
We pay $500 pw for our PPR and if we rented it out would probably get $450 pw.
The thing is i like another house better than our PPR that is for let at $490pw.
In the long run do you think we would be financially better off to rent our PPR out and in turn rent ourselves. would we be better off at tax time cos we,d be negatively geared?
Hope all that makes sense,
thanks
Mant.depends on marginal tax rate of tax payers and costs of investment loan interest, council rates, water rates, insurance cost and rental income achieved.
check http://www.ato.gov.au for tax rate scales.
half negative gearing if joint owned house and calculate for each wage earner the tax deduction.I think if you don’t buy another PPR (but you can have IP) – you can have a 6 years exemption from CGT if you move on rent. You can negative gear your property while you are on rent and as long as you move back by the end of 6 year period there might not be any CGT. At least this the situation I’m having – I lived in property for 3 years, rented it for 4 (I have few investment properties, but didn’t had a new PPR and rented this time) Now I’m selling the original PPI and my accountant says that looks like I’m not going to have any CGT..
You would probably be better off in the short term for the following reasons:
– You can claim all interest, rates, insurance, etc on your property if rented out, and
– you can also claim depreciation on fittings and maybe construction (at 2.5% pa if built after 1983), and
– You can still treat it as your main residence even though you are not living there for up to 6 years and it will be CGT exempt.So you get the best of both worlds,
you will just need to add up all the costs estimate the depreciation and see if you are going to be making a loss from renting your place. This loss can help you save tax on your income. Then work out if the amount you will save is worth the hassle of moving.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks everyone for your comments, unfortunately the property i loved has been leased out but i will keep looking for something else and bear in mind all your advice.
cheers
Mant
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