garoopnaMember@garoopnaJoin Date: 2009Post Count: 3
We have been given the opportunity to put our house on the rental market and rent elsewhere for cheaper. Does anyone think this is a good idea or has had experience doing this? What could our financial benefits be? Any advice would be appreciated.TerrywParticipant@terrywJoin Date: 2001Post Count: 16,190
Can be good as you can, maybe, negative gear and save tax. And you can still be able to keep your original home CGT free.JleeMember@jleeJoin Date: 2008Post Count: 5
I own a biggish house which is now fully paid up. I intend to put it up for rent and rent a smaller place to live.
Will I be able to claim the rental I pay for the smaller house as tax deductions from the income I get for renting my own house? Is anyone able to advise on this?Richard TaylorParticipant@qlds007Join Date: 2003Post Count: 12,018
The rent you receive on your old PPOR wil be added to your Taxable income.
Unless your rent on the new premises you are residing in are used for any form of business then unfortunately you will not be able to claim the rent as a deduction.ducksterParticipant@ducksterJoin Date: 2004Post Count: 1,674Jlee wrote:I own a biggish house which is now fully paid up. I intend to put it up for rent and rent a smaller place to live.
Will I be able to claim the rental I pay for the smaller house as tax deductions from the income I get for renting my own house? Is anyone able to advise on this?
You can't claim the cost of renting another house you live in off the original rental home income.
Is it in your interest to get a tax deduction. What is your marginal tax rate. Is it 30% if it is you could pay 30% tax on the first property income and use the 70% left over to help pay off another home loan for the next house you live in.
Or live in the bigger house and rent out the new smaller investment house loan and pay it off with the rent you are not paying or loan repayments you are not paying on the first house you have paid off..
(When you have a house paid off you can get an equity loan against it to cover the deposit for the second investment house. )
(or use first house and second house combined as security – more risky as you can lose both houses if you get behind)JleeMember@jleeJoin Date: 2008Post Count: 5
Thanks for your feedback, Richard and Duckster.
OK I get it that I can't claim the cost of renting another house as tax deducrion from the rental of my own house. But if I happen to still have a mortgage on my house, guess I would have been able to claim mortgage repayments against the rental income?WJ HookerParticipant@wj-hookerJoin Date: 2007Post Count: 272
Also land taxes, council rates, insurance, repairs, depreciation on assetts and building, etc just as per a normal rental property. I know of a few people that have done what you are trying to do. But most of them came out in front mainly because they had large loans and have moved back into their own house when loan repayments have decreased.FletcherTaxMember@fletchertaxJoin Date: 2009Post Count: 31
Just be mindful that the CGT exemption only applies for 6 years of absence from your PPOR. Afterwhich, an apportionment will apply (ie not be fully CGT exempt) or you need to reoccupy the PPOR to get a further 6 year exemption.
Fletcher Tax Accountants
http://www.fletchertaxaccountants.com.auwisepearlMember@wisepearlJoin Date: 2009Post Count: 264
just a quick question on the CGT exemption… I bought in Oct 2005 and lived there as PPoR until Feb or Mar 2007. From then it became IP and I moved overseas… I'm back in Aus now but chose to rent and keep my place as IP.
Is the 6 year absence from the month the property ceases to be PPoR and becomes IP, or from purchase date? and if I want to keep it as legal PPoR for CGT exemption how long is the period required to reoccupy?TerrywParticipant@terrywJoin Date: 2001Post Count: 16,190
The date is from the date of absence.
There is not minimum lengh listing in the legislation. Seems as long as it is your main residence and you are absent, then the rule can apply.