澳洲Australia property Buy reno sell process | Sydney


在澳大利亚 The pool at of an IP needs to be resurfaced (or so the pool doctor says), the cost was estimated to be $10K ($10,000), after recoverying from my impresssion of a cat coughing up a fur ball, it just seems far too much. Its just a standard poo I need some advice regarding a property purchase. Property - semi-detached house Bedrooms - 2 Condition - average needs internal reno to modernise Street - one of the best in suburb Location - excellent Close to schools - yes Transport - 50m


If I buy a small unit, commence reno immediately and get it back on the market exactly 6 months after the date it settled, is that considered legitimate and no dramas in terms of it being my PPoR and therefore no CGT being payable? (My mail would be delivered there and all the utilities would be in my name).

Also, is the limit about 1 such project per year?

If hypothetically I finished the reno in just 4 mths time, am I permitted to have it back on the market straight away, providing it doesn't settle before 6 mths has passed? (in order to remain CGT exempt)?

Many thanks  

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recruit2 said: ↑
If I buy a small unit, commence reno immediately and get it back on the market exactly 6 months after the date it settled, is that considered legitimate and no dramas in terms of it being my PPoR and therefore no CGT being payable? (My mail would be delivered there and all the utilities would be in my name).Click to expand...
6 months is waaaaay too long for a reno on a small unit.
6 months has got nothing to do with whether it can be your PPOR or not. It could be 1 day in the right circumstances.
6 months is the period you have to live there if you are claimimg the FHOG.

recruit2 said: ↑
Also, is the limit about 1 such project per year?Click to expand...
There is no limit. However, if you do it too often you will trigger an ATO investigation.

recruit2 said: ↑
If hypothetically I finished the reno in just 4 mths time, am I permitted to have it back on the market straight away, providing it doesn't settle before 6 mths has passed? (in order to remain CGT exempt)?Click to expand...
4 months, 6 months, delayed settlement are all irrelevant for the purpose of making it your PPOR and remaining CGT free.  

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Propertunity said: ↑
6 months is the period you have to live there if you are claimimg the FHOG.Click to expand...
Doh silly me, that's right. All makes sense now and sounds awesome then. Many thanks Propertunity.  

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Propertunity said: ↑
There is no limit. However, if you do it too often you will trigger an ATO investigation.Click to expand...
If you plan to make a living doing this which if you plan on doing more than 4 a year it probably would be then any profit would be declared as income and be subject to income tax rather than CGT.
Is my understanding of that reasonable ?
This is assuming you don't live in it as you renovate it!  

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Ok understood. Yeah I've heard that too many will upset the ATO. No worries.
I will just aim to do a maximum of 2 in the first year all going well. I will conveniently have a room at my parents' place available also in times when the one being reno'd is like a war zone etc so the renos can happen quicker.  

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recruit2 said: ↑
I will just aim to do a maximum of 2 in the first year all going well.Click to expand...
Remember too that you get a 50% discount on CGT for assets held for 12 months or more.  

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RickF said: ↑
If you plan to make a living doing this which if you plan on doing more than 4 a year it probably would be then any profit would be declared as income and be subject to income tax rather than CGT. Is my understanding of that reasonable ?Click to expand...
If you are doing 4 a year to "make a living" then you are conducting a business and the profit would be the trading profit of whatever entity you choose to do this under. There would be various tax treatments of the profits depending on the structure chosen. On the tax issue of paying income tax Vs CGT, remember GCT is paid at the marginal income tax rate of the tax payer anyway (bearing in mind that a CG could move the tax payer up one or two levels in the marginal tax scales)

RickF said: ↑
This is assuming you don't live in it as you renovate it!Click to expand...
I don't think that would have a bearing if you were doing 4 a year. Except perhaps that it might help you with insurance claims becuase the property was not vacant for more than 30 days at a time.  

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And my partner is concerned we spent 2 years doing up one house, 2 doing up the next, oh noes we're going to trigger an ATO investigation :rolleyes:

4 a year!! Are you insane!

Also you might want to look into exactly how much this is going to cost you, a cosmetic reno on a median price property will cost a LOT in stamp duty and then selling fees, your gain will have to be quite substantial to make any profit after that. The real bottom of the line cheapies is where larger % gains are found, or subdividing and building new. We only paid $1600 stamp duty on ours, and about $20 stamp duty for the new block.

You'd probably make more money buying a block of land and building a new house each year, spending your time in the house landscaping it yourself and filling it with poncy display furniture before you move on.  

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If you buy a unit, do a reno and sell it 6 months later I think you would come under scrutiny from the FHOG board. There are thousands that have had to repay the grant. For starters it will be obvious that you weren't "really" living there.

Also as mentioned- if you hang onto it for 12 months you effectively halve your CGT.  

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OK wait a minute, if it's genuinely my PPoR, isn't the whole thing CGT free? So why would I get a 50% discount if it was already CGT free? Or am I very confused? I understand if it was an IP then yes I would be subject to CGT and then the 50% discount would come into play after 12 months for that..

But yes, I am genuinely concerned about the amount of profit that would be potentially made, particularly in the current cooling market climate.. Worst thing would be to borrow up and slog through a lot of work, only to find that units were worth $20-30k less by the time I got it back on the market. I'm sure though if the reno turnaround was super quick, then it would be difficult for the market to drop that far in just a couple of months, but you never know.

But the bottom line for me will be that I'll need a place to live regardless. So I might as well be adding value to something combined with the initial purchase price being as cheap as possible to minimise the debt.  

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It may be genuinely your PPoR but you're also genuinely in it to make money, not just fixing up houses for the goodness of your heart to make it nicer for the next people and onselling with no profit. You're obviously not doing it to improve your own lifestyle if you promptly sell it as soon as you fix it up.

You're in it to make money. Doing something for money, particularly more than once a year, is a business activity not just a place to live.

Most people stay in a house they own for about 7 years. Same stats with marriage, funnily enough :) Most people fix up a HOME so they can enjoy what they've created for themselves, to improve their own quality of life, not for a profit. Then they upgrade or change areas a few years later and any money they may have made goes into their next HOME, which is nice and helps with the property ladder shiznit but is usually so infrequent you can't count it as income.  

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