澳洲Australia property PPOR purchase strategy... | 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


Any positive or negative feedback for this scenario please.
This was just an initial thought I had today for a few minutes, so haven't thought it through in any detail.
We are relatively high income earners, so I want to take advantage of our situation.

Goal is to upgrade PPOR in a few years time.
Purchase would be around 1.5mil, could be more, could be less.
Buy an old house on block of land in Sydney South (1000-1200m2) for around 1 mil.
Rent the house out while getting development approvals for a duplex, likely side by side.
Get the duplex built, cost maybe 1 mil.
Strata tiltle, or even torrens title if possible.
When complete, rent out both units.
12 months later, move into one of the units as a PPOR and sell current PPOR.
Claim all interest and costs while building, as purpose was to build IP's.
Claim all depreciation for the first year for both units.
When we move into one unit, structure the loan so that our unit is paid off (park funds in offset), and the other unit can have maximum borrowings.

The benefits I see are:
  • Tax advantages, depreciation and interest.
  • Claim all interest on loans (initial purchase+construction) while building, even though one will be PPOR 12 months later.
  • Will get an extra IP at below market value out of the deal with maximum depreciation allowances.
  • Will get a PPOR designed by myself (has extra meaning living there) at development cost (I can project manage).

Can anybody see any obvious problems with this?

Thanks  

评论
Yes, I do see a problem. I don't think you can claim the interests,... while building as the property is not available for rent (and hence does not produce an income). You can only add those into your initial cost and that reduces the capital gain that you have to pay (depending on how many years that you stay in there and the percentage, ...)

Helen  

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Hi Helen,

Thanks for your comments.
The property will be rented out prior to demolition.
A duplex will then be built with the intention of renting them out on completion.
Both duplex units will be rented out on completion.

Why would interest for this whole period not be deductible?

I'm currently doing 3 multi unit developments, build to hold.
I sure hope the interest is claimable during the construction period....  

评论
Ace in the Hole said: ↑
Hi Helen,
Why would interest for this whole period not be deductible?
....Click to expand...
I believe the interest would be deductible as the intention of building is to earn income. But check with your accountant.  

评论
I like the idea. I was thinking of doing something similar but decided that I dont really want to live next door to the tenant.

I like to keep myself unattached and use a property manager.  

评论
Hi

I believe that you can only claim the interest, costs, ... if the property is available for rent and generates an income. Why you're building it (period in the middle), it doesn't generate an income and hence you can't claim that. You can add the interest, ... to your based cost.

When you rent it at the beginning and also after you advertise for rent (after completion), then you can claim the interest.

I think there are various posts discuss about this already.

Helen  

评论
Ace in the Hole said: ↑
Why would interest for this whole period not be deductible?
I'm currently doing 3 multi unit developments, build to hold.
I sure hope the interest is claimable during the construction period....Click to expand...
The interest on vacant land is deductible if you plan to build an IP on it. So certainly, the interest on the build is too. ;)

I think there are various posts that discuss this already:
http://www.ato.gov.au/individuals/content.asp?doc=/content/00096828.htm&page=8
http://www.somersoft.com/forums/showthread.php?t=38304  

评论
I think I was confused about the rules. Thanks for correcting.

Helen  

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