hi i have a quick inquiry currently building a 2 bed granny flat on the back of my main residence have a mortgage on existing house of 150k with a value of 380k. i have a family member that will move into it on completion paying me 300 per week. the total mortage on the granny flat is 80k just wondering the best way to do it for tax. i can quiet easily do it cash or am i better declaring it or a partial amount to negative gear it.. also im in a position to buy another one within 6 months so my second question is: am i better off to move out of current house and move into the new one which i will purchase which will also be on the central coast umina beach area. any help would be much appreciated thanks
adam
Hi Adam,
It's a really good idea to speak with your accountant about this.
He'll probably advise you to borrow the money for the build because:
1. The interest is tax deductible
2. The valuation will be less than the cash you'll spend.
It's often better (for tax purposes) to let both dwellings out but you will be up for CGT when/if you plan to sell.
Most of my investors have a 'hold' strategy, where they don't plan to sell in their lifetime. They're going for volume (4- properties+) for a long-term retirement strategy.
Brazen.
Brazen | Granny Flat Approvals Sydney
http://www.grannyflatapprovals.com.au
Email Me | Phone MeGranny Flat Approvals Guru
Brazen wrote:Hi Adam,It's a really good idea to speak with your accountant about this.
He'll probably advise you to borrow the money for the build because:
1. The interest is tax deductible
2. The valuation will be less than the cash you'll spend.
It's often better (for tax purposes) to let both dwellings out but you will be up for CGT when/if you plan to sell.
Most of my investors have a 'hold' strategy, where they don't plan to sell in their lifetime. They're going for volume (4- properties+) for a long-term retirement strategy.
Brazen.
I agree. Speak to an accountant. It is too easy for someone in a forum to say "get the loan because it is tax deducible" without understanding your financial situation in full and then giving you advice based on that.
An accountant will help you analyse the tax benefits but more importantly the financial benefits/risks of both decision. You can then see how this all fits in with your financial goals and make the decision that is best for you.
Ryan McLean | On Property
http://onproperty.com.au
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