Browse Forums Home Finance 1 Jan 19, 2010 11:16 am Hi I dont know if anyone has been in this situation that might be able to help? We currently have a very small morgage on our home and we have brought a block and will be building on it. Question is: What would be the advantages and disadvantages of renting out the house we are in at the moment. ( tax etc) or is it not worth it and we just sell it. Thanks My building thread viewtopic.php?f=1&t=25279 NEARLY DONE. KEYS ON 5/11 AT 1PM Re: What to do with our house 2Jan 19, 2010 11:32 am Depreciation, 2 1/2% PA on building and equipment, Differential of interest over income produced. What are the rental rates for the area of your house? Will it cover the mortgage you owe? Positive gearing is a good thing Where you are coming from is where you are going to... Re: What to do with our house 3Jan 19, 2010 11:49 am onc_artisan Depreciation, 2 1/2% PA on building and equipment, Differential of interest over income produced. What are the rental rates for the area of your house? Will it cover the mortgage you owe? Positive gearing is a good thing Rentall prices are well over the cost of keeping that morgage. e.g about $160 pw over what we owe. so not sure how that would work as a tax benifit We wpuld also have a realy big morgage on the new place if we dont sell uuuuuuuuuh scary My building thread viewtopic.php?f=1&t=25279 NEARLY DONE. KEYS ON 5/11 AT 1PM Re: What to do with our house 4Jan 20, 2010 5:22 pm This might be the start of your new investment property career . Two things I'd question is: 1) Is the house appropriate for the rental market? If it's a rather large house, you may not be getting it's value back in rental return. 2) Can manage to take on the new house without too much stress in addition to your property (including rental revenue minus overhead)? If yes to both, I'd keep it then change the mortgage on your existing house (that will be a rental) to 'interest only' and deposit all earnings from that property into an offset account against the NEW property. You'll still be able to claim tax back from the interest paid on the existing house (even if it's not much anymore) whilst reducing the interest on your new house (that has no tax benefits besides CGT exemption). Re: What to do with our house 5Jan 20, 2010 6:08 pm Sheepdog This might be the start of your new investment property career . Two things I'd question is: 1) Is the house appropriate for the rental market? If it's a rather large house, you may not be getting it's value back in rental return. 2) Can manage to take on the new house without too much stress in addition to your property (including rental revenue minus overhead)? If yes to both, I'd keep it then change the mortgage on your existing house (that will be a rental) to 'interest only' and deposit all earnings from that property into an offset account against the NEW property. You'll still be able to claim tax back from the interest paid on the existing house (even if it's not much anymore) whilst reducing the interest on your new house (that has no tax benefits besides CGT exemption). Hi sheepdog, Q1 yes it is suitable as a rental, its close to everything, 3x1 large yard with 3 sheds and also double carport and room for a boat, or caravan etc. 5mins from beach. If it doesnt sell to couple it will sell to an investor. Q2 thats the scary bit, we would be pushing it to cover both propertys. We could but will not have much left over and as we are both in our mid 50s not much time. Our first idea was to buy a block and buildin a bit better area and sell this place. when we retire sell again and down size. Now because everyone say why dont you keep this place its got me thinking. aaah Thanks My building thread viewtopic.php?f=1&t=25279 NEARLY DONE. KEYS ON 5/11 AT 1PM Re: What to do with our house 6Jan 29, 2010 8:35 pm NEW WAY OF LOOKING at THIS: My son who has his own home now is saying that he would like to buy 1/2 of the house we are in now and we keep the other half. We would then rent it out when our new place is built. Is there anything we should be looking at to see if this would work?. My Husband seems to think that any money earnt on a rental he would have to add to salary and be taxed on, is that right? My building thread viewtopic.php?f=1&t=25279 NEARLY DONE. KEYS ON 5/11 AT 1PM Re: What to do with our house: new way of looking at this 7Jan 29, 2010 9:32 pm Quote: My Husband seems to think that any money earnt on a rental he would have to add to salary and be taxed on, is that right? Yes,this is certainly right - any income you earn from rentals is definetely subject to tax. On the other hand all expenses such as agents fees, rates, maitenance, repairs etc is tax deductible. Selling a house which has been rented out - ie is now an investment property - would also have Capital Gains Tax implications when you do sell. I really think you should discuss all the options with an accountant or financial advisor. Re: What to do with our house: new way of looking at this 8Jan 29, 2010 9:44 pm [*]Yes,this is certainly right - any income you earn from rentals is definetely subject to tax. On the other hand all expenses such as agents fees, rates, maitenance, repairs etc is tax deductible. Selling a house which has been rented out - ie is now an investment property - would also have Capital Gains Tax implications when you do sell. I really think you should discuss all the options with an accountant or financial advisor. [/quote][*] Thanks I think we will have to as its doing my head in My building thread viewtopic.php?f=1&t=25279 NEARLY DONE. KEYS ON 5/11 AT 1PM Really tight at the top of the stairs- how to get furniture into those rooms? Study books - does anyone really use them these days? Large storage closet would be more functional. 2 6890 Yeah mine about 9 metres long and 8 wide with slope of 25% at one point but the end point of the outlet is past the side of garage and if he concretes allowing for… 4 4546 4 9069 |