My current home is paid off and I don't want to sell it anytime soon. I am looking at buying another property with bank finance and rent out my mortgage free home. Obviously there is no tax advantage to renting out a mortgage free property. How can I make it a tax advantage instead of a tax debt?
There is no point renting out your mortgage-free home and borrowing to buy something else for you to live in. Nomatter which way you do it, you will be paying mortgage interest that is not tax-deductible.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
You will find this thread a useful read to explain why
https://www.propertyinvesting.com/forums/help-needed/4347967
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Hi Munz
Welcome aboard.
I second what Jac said.
Depending on the state that the properties in, a spousal transfer or sale to another entity may regear the debt.
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]
Hi Munz
There are a couple of ways around depending on how the property is held.
You could look to sell the property or buy the property from your spouse if it jointly owned or alternatively look to sell the property to a Unit Trust structure if owned solely.
Regretfully there will be some stamp duty payable but dependant on your marginal Tax rate and how long you intend to keep the property it could be well worth it.
As i say difficult to comment further without the numbers or knowing your current financial position.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
If the property is in Victoria you may be in luck as 1 spouse can sell to another spouse without stamp duty.
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
Thank you for your responses. If I only knew this before I purchased this property. I will take this on board for my next purchase as I eventually want to turn my next purchase into an investment property. The property is held in NSW and solely in my name. My spouse is on the lowest marginal tax rate.
NSW has an exemption from stamp duty when transferring from 1 spouse to both spouse – ie adding a spouse to title. But this only applies if main residence and you intend to keep it as the main residence.
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
Munz wrote:Thank you for your responses. If I only knew this before I purchased this property. I will take this on board for my next purchase as I eventually want to turn my next purchase into an investment property. The property is held in NSW and solely in my name. My spouse is on the lowest marginal tax rate.Hi Munz
At least you won't make the mistake again. Just ensure the next loan is IO with an offset – park all of your spare cash in the offset and don't pay down the principle.
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]
Thanks Terryw. Does that mean the exemption only applies if I add my spouse and not fully transfer to him?
Munz wrote:Thanks Terryw. Does that mean the exemption only applies if I add my spouse and not fully transfer to him?Yes for NSW. And I think there has to be no consideration – which would not help the tax position.
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
I am not a master in these but I found this link which might bring some clarity of what can be done in NSW. There is no indication that property cannot be IP..
http://www.osr.nsw.gov.au/about/services/osrassist/marriage/transfer/liable/
Jamie M wrote:Hi Munz
At least you won't make the mistake again. Just ensure the next loan is IO with an offset – park all of your spare cash in the offset and don't pay down the principle.
Cheers
Jamie
Hi Jamie.
Would you please explain how this works ?
Cheers
thecrest
thecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Guys hate to say in this situation the property definitely will be a IP and therefore there is no Tax benefit.
Other consideration is serviceability irrespective of whose name the property is in.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
In NSW, you can transfer the title under marriage/spouse section from single name to both names (50/50) without incurring stamp duty;
But the purpose of the transfer is for main residence only
I am not sure about IP.. probably not
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