Hello all,
I have been a lurker for quite some time and really appreciate the wealth of information given in this forum. At the moment, I am in PPOR – IP – another PPOR mix up and need someone to shed a light at my current situation.
I’ve been trawling through past forum answers however, still a bit lost on some details.
I bought my PPOR in March 2008 and been living in it since, will call this one A. I just bought another property, B and settlement is in April 2011. I will move to B post settlement and will rent A out. However, I will move back to A in 1 or 2 years time at max. I do not intend to sell any in the near future (next 5 years) however, most likely B will be sold in the next 10 years.
Background Info:
-both A and B are under Principal and Interest Loan
– I have a surplus fund of approx $18k sitting in A loan account, the loan is not an offset type.
Based on my research, I will need to do the following;
1. 1. Get a valuation done on A from the date it will become ‘available for lease’ for CGT calculation purpose. Also I will need to do last minute repair work on A.
If I can claim A under the 6 years rule for CGT purpose, why I still need to get valuation done?
Is this done so that I can minimise my Tax Liability on A if I sell?
In 2 years time (2013), when I move out from B and back to A, can I apply the 6 years CGT exemption rule to B?
Should the valuation carried out after or before minor repair work?
2. 2. Get a depreciation schedule for A
The building is pre 1985 however I did cosmetic reno in 2008 worth about $20k (new kitchen, bathroom, polished floorboards, heating, timber venetian). Is the schedule still worth it?
In regards to Loan on A, given my intention to live and treat this as my future PPOR, during the time when it is rented out, should I still pay extra payment (reducing interest) or just make minimum payment (bigger portion of interest payment) to maximise tax deduction?
A bit torn here as I heard that you don’t make any transaction based on tax saving etc etc..??
Apologize for the novel, much thanks in advance
-Winnie-
1.
You never know what will happen in the future, you may never end up moving back into property A. So it may be worth getting a valuation now when you move out. It may also be worth getting another valuation done when you sell – valuation as it was when you moved out. It may cost you an extra $300 but using the most favourable one could save you many thousands.
You only need to nominate your PPOR when you sell, so you could possible claim either A or B. Whichever is more favourable at the time maybe.
2. You should speak to a QS about the dep schedule – they will ask a few questions and tell you if they think it worth it.
you should also convert your loans to IO with offsets. Paying extra now will result in more tax payable later.
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
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