Sounds like its a great idea!!! A lot of pros there!!!
PMSL I was asked other day of boys were twins!!!! I look at said umm nope 18 months 4 days difference in age! WTF is with people
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Sounds like its a great idea!!! A lot of pros there!!!
PMSL I was asked other day of boys were twins!!!! I look at said umm nope 18 months 4 days difference in age! WTF is with people
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Don't forget that your rates and body corporate fees will be tax deductible - you should get some tax advice prior to doing this to make sure you have everything documented so you get the most you can out of the tax savings that come from an investment property.
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Well my brother has an investment property and says we will be too much out of pocket because the rental income is lumped in with our taxable income and you don't get to claim the interest that you pay on the mortgage because it was a home loan and not an investment loan first up?
I'm very confuzzled.. LOL
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I'm not sure that is correct. Your rental income is added to your income - but this doesn't mean that you don't get to claim deductions for other items. However, I know it's tricky with the mortgage payments when you lived in the property prior to converting it to an investment property. It would definitely be worthwhile to get some tax advice from a qualified professional as this could really impact the $s in either direction.
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You can't claim the interest on your mortgage so you would need to refinance your home loan into an investment loan and then you would be able to claim the interest. I'm no expert though that's the way I think it works.
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A friend of mine (who I think was in the same town as you) did the same thing. Turned her primary home into an investment property and bought closer into the city. I would definitely check out a good accountant on this one and also chat to your bank as the loan type may need to be changed.
I know what you mean about the travel, I am about the same out of town. We are spending atleast $10 per day on fuel and that is just the basics, no extra running around. We have land here though, no neighbours etc, so are happy to put up with the distance. I am trying to get more organised with travel and with grouping activities together or just foregoing some if it means 2 trips into town that day.
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The interest on your home loan IS deductable, you CAN claim it, you don't need to refinance to an investment loan. But, only that amount is deductable - so if you have redraw and take that out, or top up the loan to get a car or something, that extra amount ISN'T. Rates, maintainence, property manager fees are all deductable but large upgrades that are well over and above repairs (new kitchen etc) aren't, you have to depreciate those over several years.
I tried to sell my last house, couldn't, now it is rented out.
Going to have timing issues selling our current house, so it'll probably get rented out too. You can rent a house out here within a week, selling takes months.
There's always a catch though. You have tenants. And tenants are humans, with all the foibles humans have, so if you get unlucky you'll have issues and probably not earn as much from the house as you thought you were going to, or they'll not look after the house as well as you would. My tenants have indoor dogs and cats ... OMG ... so much hair!
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Me again !
I have no advice of course apart from - yes i think its a great idea for many reasons if you can do it !
Closer to town = good !
OK - i'll go now !
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Oh, did you get the first home owners grant or stamp duty concessions on this house? If so, that's a whole other kettle of fish
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Nah tassie doesn't have any concessions with their stamp duty when you buy a house down here - makes no difference if its your house or an investment house - you pay the same rate of stamp duty. The only thing that differs is the land tax that is payable if its not your residential premises, but I rang about it today, and ours is $0 because its worth under $25,000 (the land value) and you only pay over $25,000 - but even if it gets to over $50,000, its like $180 for the year or something.Oh, did you get the first home owners grant or stamp duty concessions on this house? If so, that's a whole other kettle of fish
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Unfortunately it doesn't work like that, and if the ATO decides to do an audit you could find yourself in big trouble.
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Misty - we've only had the loan since January, and haven't drawn any money out of the redraw (not that there is much in there) but yeah, its not been used for anything but paying the repayment every month.
Thanks guys - guess I'll have to go see an accountant - scary.
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Bugger, I always thought if you move out of your house to rent it out, you would need to change the loan to an investment loan and from that point in time you would then be able to claim the interest as a tax deduction as you are no longer an owner/occupier of that property.
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I don't know enough about all the money stuff to give you my opinion, but I think you should do it so you're closer to me!!!
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You don't need to change anything about the loan. You just move out and start claiming a tax deduction - but only on the loan that was used to buy the house itself, if you topped it up or used redraw for any non-house stuff (car, holiday etc) you can't deduct that portion. And its only the interest, not the principal and interest - which might be why you're thinking specific investment loans cos they are usually interest only. Most banks will let you switch over to interest only for a smallish fee.
We're actually living in what was going to be our investment property (so the loan is interest only) and have our old house rented out (principal and interest), and to make it more confusing when we make our current house an investment too only about 2/3 of the loan is deductable because we split the land in half to build a third house! Very confusing ...
I also hang out on an australian property investment forum that has parents on it as opposed to this parenting forum that has property investors on it - you can get all the good info there. Its Somersoft Property Investment Forums . Capital gains tax is another thing you need to think about with investment properties and selling them down the track. There's heaps of threads on making your house into an investment property over on that other forum.
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In regards to the homeloan, the interest is deductible so long as you haven't redrawn any money off it for personal use. If you have used some of the money for personal use only a portion will be dedctible at best, or at worse none will be if you have done it umpteen times and it is now impossible to track the deposits and withdrawals (I made that mistake). If you have an offset account rather then a redraw facility you don't have any issues and it will all still be deductible.
FWIW - It may still be worth doing even without the deductibility...
In regards to the 'small town attitude', you don't have to be in a small town to experience that. I have been asked on numerous occasions if my boys are twins :rollseyes: there is 22mths between them. Yes the are both baldy boys, but one is a baby while the other is running around tearing up the place! And I get asked / told on a daily basis that I must have my hands full.
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Mel I would strongly suggest you get some financial/tax advice before you go any further......... to have an investment property set up as such it needs to be set up in the original mortgage so that you can negatively gear it, claim the deductions etc........ the rent you recieve will be taxable, and if you can't claim the deductions (depending on your circumstances) you may end up being gravely out of pocket.
ETA, just another thought .......... not sure on this one, but if you rent it out you could end up being liable for CGT depending on the time frames as to when you can buy/sell etc. Get some advice!!!
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