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Merv

Investment property

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Folks.

Am considering buying a 2nd property near the ocean, renting it , with a view to living in it in perhaps 4 yrs time.  I understand there will be some tax implications and stamp duty involved when changing my principle address and selling the current residence.  Anyone done something similar ?

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Disclaimer:  I'm not an accountant and I don't play one on TV

Think you're asking the wrong people

My Best Advice: Get yourself a great financial wizard/genius Accountant that you trust implicitly. 

From my (very) limited understanding of the tax implications around investment properties, its very easy to make very expensive mistakes.  And worse still, the rules around them seem to change yearly. 

And as a side note, I believe this year the tax man is concentrating on dodgy deduction claims on investment properties regarding renovations called repairs, inspections etc etc etc.

AJ

 

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2 hours ago, Merv said:

Folks.

Am considering buying a 2nd property near the ocean, renting it , with a view to living in it in perhaps 4 yrs time.  I understand there will be some tax implications and stamp duty involved when changing my principle address and selling the current residence.  Anyone done something similar ?

You won't have to pay any capital gains until/if you sell the place you will be renting  out. And even then it's only calculated on the increase during which it was an investment. 

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I can't answer on Australian specifics but as a landlord of two properties back in Blighty my main advice would be to be aware you are buying a business and not an investment. These things don't make money passively. Also, lettings agents are mostly useless.

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If you are selling your primary  residence then no issue.  If you move to the investment and then sell it later then the 4 rental years are counted towards capital gain when you sell that one (ratio against the years you lived in it as a primary resi).

Be aware of what you can claim against the investment.  Lots try and claim all sorts of repairs as deductions for the year but it has to be like for like, no upgrades allowed.  

Have a chat to a Fin Advisor you know - lots on the internet to point you in the right direction on the rules.

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And make sure you hang onto the investment property for at least 12mths before selling, that way you qualify for a 50% reduction in the capital gains tax owed when you sell.

We had an investment property at the coast.  For the first 5-6yrs we had it rented out for holiday lets.  Bloody nightmare, you won't believe the shit holiday renters do to the place.  Then we changed to a permanent rental for the next 6-7yrs, an old single bloke, best tenant ever, looked after it like his own.  Felt bad when we sold it and he had to move out.  We paid about $10K in capital gains tax between me and my wife.

We were also caught out by the amount of maintenance needed at the coast (e.g. rot in wooden decks, termites) compared to up here on the Tablelands.  The coast is a relatively harsh environment for properties.

And have a good look at what might happen on neighbouring properties on your boundaries.  We had a nice view of an open back yard off our deck, but then a property developer bought it and was going to put up double-story units.  Luckily for us he went broke & it never happened.

BTW we are pondering doing similar, though in our experience investment properties are a pretty crap return compared to shares & super unless you can be guaranteed of good capital gain (which we did not get).  Would have been miles ahead if we'd put all the money we paid into shares/super.

Edited by ComfortablyNumb

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Im not really considering it a money making venture. More so a lifestyle choice for when i retire. Just thought by getting the property in the next 12 mths, makes the process simpler down the track.

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I have an investment property and have watched its value go backwards for the last 5 years. 

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Have contacted my adviser and we shall have a pow wow.

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On 20/08/2019 at 2:33 PM, Merv said:

Have contacted my adviser and we shall have a pow wow.

Did you resolve your previous query about "finding a financial advisor" then?

 

feedback?

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