Hi All,
Number one son is looking at buying his first house( New 2 Bedroom Unit in Reservoir Vic)
Purchase price approx 350-360k and he is thinking of renting(Est rental return $320-$350) it straight out rather than living in it,
#How does this effect his FHOG?
#What are the pros and cons of doing this?
Thoughts?
Regards
Michael
In terms of FHOG, to be eligible he must reside in the property sometime within the first 12 months and then for a 6 month continuous period.
Same with the first home owners stamp duty concession, except you must reside in the property for a continuous 12 months once you start living in it.
Cheers
Tom
Tom
So you could in effect move into the property in month 11 and still receive FHOG,could you also claim stamp duty concession in you lived in the property in month 11 for 12 months?
How would this effect you claiming your tax breaks with interest on loans etc
Cheers
Michael
Coota,
The reason for the requirements are due to first home buyers purchasing property that is already tenanted on a lease. It allows the lease to run out and then the buyer to move in, claim it as their PPOR fulfilling their FHOG requirements. So if someone had that lease until month 11, and you then lived in it as your PPOR, then it is fine.
Now if you bought the property vacant, and decided to rent it out for X months and then moved into it before the 12 months, I think that is okay as well, though you should confirm this with the SRO to be sure.
Interest, etc will be deductible for the X amount of months it is rented.
Also note that if your son decided to buy it as purely an investment and not live in it nor claim any FHOG, then he will be eligible for the FHOG at a later date.
Cheers
Tom
Hi Coota,
I am a mortgage broker and i've found that a lot of people are buying investment properties and renting first these days. It can often work out that the rent received, tax deductions and savings when comparing rent your PPOR compared to paying repayments on a loan make renting and investing better. In fact, I have seen people pass up on the FHOG altogether when they have crunched the numbers.
It's not the right strategy for everyone but certainly worth some thought. I wrote an article on this topic on my blog if you're interested. http://investmentproperty-howto.com.au/5-reasons-buy-investment-property-buying-home/
Do both.
Buy a PPOR, utilise the FHOG and any other concessions if they're available to you.
Add some value to your PPOR through renovations. Access this newly created equity and use it as the deposit/costs on your first IP.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
JamieM, I like your suggestion above.
May I ask what if the PPOR has been paid off… is there a way to access the equity of the PPOR for deposit purpose?
Cheers,
Ailime
Jamie,
Property is a new 2 bedroom unit so not much chance to add value in that regard with any renovations thus the strategy to rent out a look for future growth to release equity down the track.
Regards
Michael
Hi Ailime
When you say can you access the equity for a deposit are you referring to a new IP or PPOR?
Whichever way Yes you can access the equity however if the funds are for a new PPOR it wont be Tax deductible.
Structure it correctly and keep both loans separate and you will be able to access the equity for a number of property purchases.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Thank you so much, Richard.
Do I understand you correctly : a home owner can access the equity in his/her PPOR, even though it has been paid off and the loan has been 'closed'?
Is it correct to assume the home owner needs to apply for a new loan (for the deposit of the IP) using the existing PPOR as the collateral, and another new loan is for the rest (say, 80%) using the IP itself as the collateral?
May I get a copy of your API interview, please? Thanks again, Richard.
Coota/Michael:
My apologies for 'hijacking' your thread.
Cheers
Ailime
Hi Ailime
Sure would you like to drop me an email or PM me your email address and i will happily send you a copy of the article.
In regards to the loan structure you just about have it right.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
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