Investment property topics

Capital Gains Tax

nzbigglesau — Thu, 27 Feb 2020 01:31:39 GMT

Hi,

We inherited an investment property in 1995. What is the ato procedure for assessing the cost base? Also if their value is lower than my esitmate what steps should I take to resolve the difference? The cost base that was suggested to me (by family) is twice what I was expecting.

Thanks

Mark

Main Residence Exemption

Agni — Wed, 26 Feb 2020 22:57:36 GMT

Hi All

I have a residential property where I had been living till 2015, and since then I have let out the property from October 2015. Now I wish to dispose it and claim the CGT Main Residence Exemption. My question is : when is the last date that I can dispose off the property?

Many Thanks.

Refinance interest from paid off property

Miamia — Tue, 25 Feb 2020 18:20:15 GMT

Hello, I have a question, is I pay off my mortgage for my current property, in the future, if I use this property to get mortatge from bank again, can the interest be used for deduction? Say if this property generates rental income of 20k and the interest is 10k and depreciation is 5k, how much tax do I need to pay?

Thank you!

Depreciating assets

Alba — Tue, 25 Feb 2020 08:32:16 GMT

Hello Community,

I have a question in regards to purchasing a depreciating item, for instance if I buy an item of $400, can I claim only $300 immediate deduction, because is less than $300 and not claiming the other $100, rather than depreciating the item for its useful life. Any help with this would be very appreciated.

Cgt for foreign residents

Miamia — Mon, 24 Feb 2020 19:05:57 GMT

I know that from July 2020, foreign residents will no longer be able to apply 6-year exemption rule, so if I sell or transfer my former home in Sydney, will I be taxed on the capital gain based on the original purchase price, or the market value when it was first rented out?

And how many months will a valuation report valid for? I mean if I am going to transer title on June, when is the earliest time I can get the valuation report? Can I use the same report for stamp duty evaluation for cgt?

Thank you so much!

Refinancing Investment loans

Kazi — Sun, 23 Feb 2020 03:29:39 GMT

Hi ATO,

I and my wife have two properties jointly owned. One of which is owner occupied and the other has been used as investment. We receive rental income from the investment property. We have four mortgaged loans against those propeties as different figures and bank interest rates. To my best knowledge none of the loans specifies which properties they are atached to. We are thinking of refinancing the four loans to convert into two representing two properties to receive better interest rates.

Is it allowed in ATO's perspective to combine any two loans (out of 4) into one against the investment property and declare the interest payments in our future tax returns?

Cgt on selling house that was investment then my PPOR

HM1 — Thu, 20 Feb 2020 23:02:00 GMT

Hi all, after selling a house is any cgt to be paid on a house that is increased value that was rented out, but then became my PPOR? If so, how to work out how much?

Investment becoming PPOR

HM1 — Thu, 20 Feb 2020 22:55:04 GMT

I’ve got an investment property that’s been rented out a while and since increased in value. How do we change PPOR from our current house to the investment property? How long do we need to live in it before it becomes our PPOR?

Buying a property when married

Mabel — Thu, 20 Feb 2020 06:26:09 GMT

Can my husband buy a property on his name and claim 100 per cent of the rental income?
Mabel

6 year rule

Miamia — Thu, 20 Feb 2020 05:49:38 GMT

Hello, I have a question, I am a PR of australia, I purchased a home in Sydney in 2013, lived there for two years then moved overseas for a job, I purchased a home here and rented out the Sydney Propertt, but I am not an PR or citizen of this country, I would like to come back to Australia but not sure when.

If I sell the sydney property now, can I treat it as my main residence to avoid the cgt? The examples provided on ATO website seems to allow us to nominate one of our two main residences at a time, regardless which one we live in, but just want to make sure! Thanks

Termite Barrier

SD4815 — Tue, 18 Feb 2020 05:04:13 GMT

Can you claim immediately a termite barrier installed in a rental property?. I'm a little confused some private rulings say yes and others say no. Some say its capital - does that mean you can claim it under depreciation or building write off rules or it just sits on capital account. Would appreciate any thoughts

Redraw loan specifics for investment purposes

Howdy — Mon, 17 Feb 2020 09:46:50 GMT

Hi, I'd really appreciate the ATO or an accountant to answer this. I know that if you withdraw from a redraw, the purpose must be for investment purposes to be able to claim interest expense on tax. However I can't find information which provides further definition on how redraw funds are "used".

Background: In considering a redraw vs offset for a loan. An offset account looks better for flexibility and simplicity but the redraws tend to have better rates so I'm looking into them. Once my funds go in a mortgage, they don't usually come back out, so I don't need an offset for a transaction account, but I want to know just in case, what sort of a headache this could potentially become if I need to redraw later on.

Consider this hyothetical scenario: two mortgages - lets say both are over investment properties.
Mortgage A: interest @4%p.a - has an Extra $20k sitting in an offset account.
Mortgage B: interest @3%p.a. - has an Extra $30k of payments which are available for redraw.
Ideally one could redraw the $30k from B to put into A (so now A has $50k, and B has none extra) to save money on the rate differential and both are for income producing purposes so all interest is tax deductable. I.e. you "used" the money from B's redraw to go to A, which is for an investment purpose (so all is good atm). But because A is an offset, then what happens if, say you later want to take out the funds from A to say go on a $50k holiday. Were the redraw funds already "used up" as soon as they got there, or are they still in the process of being "used"? Which of these, if any, is true, as they all sound a bit strange to me:

- 1) As soon as A gets the $30k redraw funds, it is Instantly "used" for income-producing investment purposes, it's fulfilled it's obligations as a redraw, and you can now do whatever you want with the funds as they are now classified as offset funds (i.e. take out the 50k tomorow) and still claim all interest expenses on both mortgages A and B on tax. Effectively the redraw gets 'freed' through the offset account. I doubt this one as it sounds a bit similar to a 'Wash-Sale'. Alternatively, if this does not occur immediately, how long do the funds have to live there before they are 'freed', a month, 3 months, a year?

-2) The 30k from B's redraw is 'forever tainted' and you must at all times keep a Minimum 'parcel' of $30k in A's offset before things start geting classified as non-income producing. i.e. I can take out 20k from the offset for the holiday but if I take out 50k I'll have to do some calculations on what is tax deductable as the 30k from the redraw won't be.

-3) The redraw funds have created a 'uniform mixed pool' in A in the ratio of 2:3 as soon as they went in. So that even if I take out only 10k from A's offset, it's assumed some came from the offset, and some came from the redraw, and i'll have to keep tabs of this and do a heap of calculations to work out how much is tax deductable. (I won't even ask how new funds will be treated in this scanario...).

Any genuine help is appreciated (people please don't reply with 'ask an accounant'). Thanks in advance =]

Tax matter relating to refinancing property

wonderabouttax — Mon, 17 Feb 2020 02:00:06 GMT

Currently living in own property, seeing increase in value over the last many years. Plan to refinance and put forward the extra money to purchase a new home to live in, and turn existing home to investment property. Assume I am able to refinance and draw $100,000 from existing home, and use it as downpayment to purchase a new home.

My questions are:

1. Can I do the above? Is the interest on $100,000 redraw still considered tax-deductable?

2. From CGT perspective, if I get a valuation report of existing home, prior to turning it into investment property, will CGT based on this valuation or the price I paid when first bought the property?

Thanks.

Deductibility of interest on loan for rental property

DuffSovietUnion — Sun, 16 Feb 2020 03:46:52 GMT

Hi,

I have a question about the deductibility of interest on an investment property.

I have a client who took out a mortgage loan in 2014 for an investment property used to produce rental income. The loan was split between a home loan account and an equity saver account, which was used as a chequing account, mainly for private expenses. Interest was incurred on this account against the overdraft.

In 2017, she consolidated the equity saver / chequing account into a loan account, which is not used other than to make repayments against.

In 2018, she sold the property and the proceeds were used to pay out the original home loan, but she still has the equity saver / loan account (and will for a while).

Is she allowed to claim interest deductions on the equity saver / home loan account even though most expenditure on the account was private? The original overdraft and loan was for investment purposes.

Also, can she claim an interest deduction for this account in 2019 even though there is no rental income to claim it against?

Thank you.

CGT and 6 years absence rule

Ana1 — Fri, 14 Feb 2020 04:08:31 GMT

In light with the CGT application for expats applied since December 2019: I am an Australian citizen currently working in Europe. I am a non-resident for tax purpose. I own and have been renting out my house for 4 years alreay. I will return to Australia and become a resident for tax purpose by the end of this year. I am planning to live in my house first and then sell it within 6 months since my return to Australia. Question: Will I be exempt from the CGT on a basis that I will be an Australian resident for tax purpose, selling my own house which was rented out for no more than 6 years?

CGT on property lived in then rented

fambo — Thu, 13 Feb 2020 04:33:33 GMT

My wife and I purchased an apartment in 2009 for $460,000. Between 2009 - 2015 we were owner occupiers of this apartment.

In 2015 we decided to purchase a house. As such, we turned the apartment into an investment property and began renting it out. The house became our principle place of residence. We also had the apartment evaluated in 2015 (before moving out) and it was valued at $850,000.

We now want to sell the apartment but want to know what the CGT liability will be? For instance if we sell the apartment at $900,000 is the CGT based on the gain we made on the initial purchase price of 460,000 when we were owner occupiers?

Or is it the valuation price of 850,000 as of 2015 when it became an investment property ?

Thanks!

Capital loss on main residence

TaxGuru — Thu, 13 Feb 2020 02:24:17 GMT

If someone has a main residence which they predict will sell at a loss can they claim the capital loss against any other capital gains?

Section 118.1 ITAA1997 states you can ignore a capital loss not that you must ignore it.

The ATO also doesn't specify disallowing claiming capital losses from main residence.

Deductions for the costs of holding vacant land and off-the-plan purchase

PeterW — Wed, 12 Feb 2020 03:38:37 GMT

It appears the new law which restricts the deductibility of the costs of holding vacant land (s26-102 ITAA 1997) does not apply to off-the-plan purchases as, under such contracts, the purchaser does not acquire an interest in vacant land – but is purchasing a contractual right to have a property built (QC 60249). Therefore, deductions for interest on a loan for an off-the-plan purchase are available where the property is being acquired to derive rental income (TR 2004/4 & Steele's case).

Can you please confirm?

CAPITAL GAINS

SUH2525 — Wed, 12 Feb 2020 01:41:41 GMT

Hi All, I purchased a property in Sydney just prior to leaving for overseas on a posting in April 1996. I rented it out for the 3 years I was absent from Australia. Upon returning in April 1999, I moved into the property and lived there for 8 years until April 2007. I have since rented this property as I had to move to Melbourne where I lease a property. Since April 2007 I have rented the property, apart from a short period of approx 3 months when the property was between tenancies. Over the periods of renting the property, I have incurred losses each year including but not limited to mortgage interest, body corporate fees, council and water rates etc etc etc. I am now considering in selling the property and wonder what my exposure to capital gains tax will be. Can anyone assist in advising what the rulings are?

claiming deduction for interest on stamp duty

guyf — Tue, 11 Feb 2020 00:43:17 GMT

I know I can claim tax deductions for Interest paid on a loan used to purchase an investment property.

If I also borrow money for the aquisition costs, such as stamp duty, is this also deductable?

E.g. Property costs $500k, plus stamp duty of $30K. If i borrow $530k to pay for these, can I claim interest for full $530k loan, or only the $500k portion?

thanks

Capital Gains Property - Change of Residency Cost Base?

pam1972 — Sun, 09 Feb 2020 05:05:46 GMT

What can be included the cost base for a foreign investment real-estate property that was purchased as a non-tax resident and sold when a tax resident of Australia?

In 2007 I was a tax resident of the UK and purchased an investment property.

In 2010 I became a tax resident of Australia.

In 2020 I will sell this investment property and I am still a tax resident in Australia.

In understand the cost base for calculation for capital gain tax is based on the market value when I become a tax resident of Australia.

Questions

Is the cost base similar to other properties?

For example, do you add the purchase costs, capital improvement costs to the market value (when you become tax resident) to determine the cost base for capital gains purposes?

Can you please refer me to the appropriate legislation or tax ruling that justifies the above answer?

Property

Nb2 — Fri, 07 Feb 2020 12:08:22 GMT

Hi
I would like to find out what the implications are in to transferring my investment property into my wifes name. Is it something that can be done easily.?
Thanks in advance

CGT on non-strata titled duplex

Skipper — Fri, 07 Feb 2020 05:16:54 GMT

Background: I owned 1/3rd of non-strata titled duplex built pre 09/1985. My father and mother resided in one unit (mum passed 22 years ago). Title then changed to 1/2 dad 1/2 me. I've been told 1/6th is a CGT event for me from mum's death? I resided in the other unit for 3 years (32 years ago) until I bought a house with my partner. My unit remained vacant for 32 years (dad didn't want neighbours!) Dad passed August 2019. I have recently rented both units.

Question: Will I have to pay any CGT if I sell the property (either on my half share or my father's) which I can only sell as one property as it is non-strata titled?

Loss on sale of investment property

Kathy — Tue, 04 Feb 2020 06:40:19 GMT

I purchased a property in 2005 for $340,000. Since the GFC, the property has been heavily negatively geared and I average a loss of aporox $60,000 per year. I now have it on the market and the market is not good and recently have been offered $254,000 for it.

Can i claim the loss all in one financial year or is it spread over a few years? I also have to pay commission, advertising fees and all costs associated with the solicitor.

Replacement of carpet, blinds, kitchen appliances and repaint of investment propery

Kathy — Tue, 04 Feb 2020 06:36:05 GMT

I have been renting my property since Oct 2015 and recently the tenants decided not to renew their lease. It is still vacant although my property manager has been working hard to find suitable tenants. I have decided to move back in however the property needs to be repainted, new carpet laid, new blinds installed and new kitchen appliances replaced due to wear and tear from having numerous tenants living there. The work will be completed prior to me moving in. Am I able to claim these on my tax as deductions against this property?

CGT investment property

Bilawal — Mon, 03 Feb 2020 12:14:46 GMT

Hi, i have recently sold an investment property. We originally bought the property in 2004, lived there until 2005, we started renting when we moved out. Now we sold the property last year 2019.
My question is, we were claiming the depreciation on the property up until 2019. I have read on ATO website that we need to subtract capital works(allowance) depreciation from cost base. It does not explain about low value pool or plant & equipment depreciation. Do we need to subtract low value pool and plant & equipment depreciation that we claimed through out the years from cost base ?

Improvements for Tenant in Commercial Property

NathanPeachey — Mon, 03 Feb 2020 07:11:00 GMT

Good Afternoon All,

I have been involved in a situation in where a significant amount of money was spent on improving a commercial property for a tenant, the cost was then repayed over the term of the lease. On the invoices it was clearly shown as a seperate item - improvements. Due to the high value, the improvement rent was alot of money and it has been treated as taxable income. We claimed finance expenses and depreciation, but also recieved a large tax bill due to the increase in taxable income. Should i be able to claim that the improvement part of rent is repayment of a loan/funding arrangement that is not taxable?

PAYG Variation Wi

NorieWH — Mon, 03 Feb 2020 04:24:30 GMT

Hi ,may I confirm if ATO requires original signed PAYG Withholding variation forms? and what are the supporting document required when lodging PAYG Withholding application form?

Using SMSF to pay off mortgage

Jcurcio — Sun, 02 Feb 2020 21:26:31 GMT

Hi i have an investment land however due to the uncertainty of the work force can i use part of my SMSF to pay off mortgage I'm 57 years of age.

Loan from New Zealand family trust

Brent — Sun, 02 Feb 2020 10:06:30 GMT

I have an investment property in Australia. I am considering a loan from my partners family trust, which will be advanced into the property offset account and would 100% offset the mortgage. I will pay interest to the family trust at a slightly better rate than the current trust is getting from term deposits and slightly less than the current mortgage rate to the bank.

The loan will be documented and the interest will be paid probably quaterly.

So, just want to make sure that this will not be considered income and is the interest I pay a deductable. As the family trust is in New Zealand, would there be any tax to pay from the trusts perspective in Australia. The family trust would of course be paying tax on the interest in New Zealand.

Currency Act 1965

Goldman — Sat, 01 Feb 2020 16:13:25 GMT

Hello There

If I buy some Australian (Perth Mint) Silver coins: Say the 1-Ounce (face value $1) or the 10-Ounce (face value $10) - is that transaction (or purchase) a LEGAL TENDER? If I exchange a $50 note for 50 x One Dollar circulating coins, is that a TENDER and a LEGAL TENDER? Or something else?

Because the Currency Act 1965 defines "legal tender" :-

Part IV Legal tender
16 Legal tender
(1) A tender of payment of money is a legal tender if it is made in coins that are made and issued under this Act and are of current weight:

(c) in the case of coins of a denomination greater than Fifty cents but less than Ten dollars ($1 Silver Perth Mint COIN)—for payment of an amount not exceeding 10 times the face value of a coin of the denomination concerned but for no greater amount;

d) in the case of coins of the denomination of Ten dollars—for payment of an amount not exceeding $100 but for no greater amount; and
(e) in the case of coins of another denomination—for payment of any amount.

And what does "BUT FOR NO GREATER AMOUNT" mean? Does it mean I can not tender more than 10 x $1 Coins?

And if both Parties agree to tender 11 or more $1 Coins, then is the TENDER a "Legal Tender"? Or something else?

And if I purchase $26 worth of cups of coffee and I tender a $1 Silver Perth Mint 1-Ounce coin (the current value) - is that a LEGAL TENDER? As it exceeds the 10 times Legal Tender LIMIT => the face value of the coin is $1.

And is the EXCHANGE of say $640 (bank transfer) for a Perth Mint 1/4-Ounce Gold coin a "Legal Tender" or some other TERM. See :-

9 Transactions to be in Australian currency
(1) Subject to this section, every sale, every bill of exchange or promissory note, every security for money, and every other contract, agreement, deed, instrument, transaction, dealing, matter or thing relating to money, or involving the payment of, or a liability to pay, money, that is made, executed, entered into or done, shall, unless it is made, executed, entered into or done according to the currency of some country other than Australia, be made, executed, entered into or done according to the currency of Australia provided for by this Act.

I expect the answer is simple. I just can't fathom it.

Investment property maintenance labour cost

atoquestions — Fri, 31 Jan 2020 12:59:18 GMT

Hello,

I am paying my father-in-law who has a ABN number to do some handyman/gardening jobs for my investment property.

Can I claim they as investment property expenses?

If I can, what documents do I need to prepare for tax return?

Thanks

Property Investment in SMSF

kristinechen — Wed, 29 Jan 2020 22:55:35 GMT

Can the SMSF purchase a off the plan property as investment please?

Expenses on Investment property

HoaNguyen — Tue, 28 Jan 2020 21:50:54 GMT

Hi there,

One of my client, their main business activity is consulting for construction industry. They bought a block of land back in 2019 financial year and plan to build 4 units to sell. The development haven't started yet.

So in 2019 financial year, expenses were incurred: stamp duty (the land in ACT), land tax, water rates ect. and the cost of land and no income

Without including the development expenses, they have income from consultant work with result a net profit at the end of 2019 financial year

Should I include all expenses from the development (stamp duty (the land in ACT), land tax, water rates ect. and the cost of land) as deductions or should I hold up the development expenses until income comes in?

My plan is to only include stamp duty, land tax and water rates. and hold up cost of the land until income derives

Thank you

Regards

Strata Expense; Capital Work Fund

Rac — Tue, 28 Jan 2020 01:30:30 GMT

Hi there,

We have a client who own investment property who pay Strata and payment towards Capital Work Funds (under strata management). How would you go around deducting this?

Under ATO legislation this is not an upfront deductible item, is that correct? However, I have looked at the strata management report today and find it impossible to determine the amount that is deemed capital work depreciate. As the balance is usually carried forward to later year.

What is the usual practice do we only expend a % of it according to the 'Expense' item in the report and then capitalised the rest as cost-based item?

Can we not claim the whole amount as a deductible figure as part of strata management, as this item will not be refunded to the client

Much appreciated for your help on this.

Claiming interest on refinanced home loan

dbrightstar — Sun, 26 Jan 2020 02:23:54 GMT

We ( me and my partner) bought a property in 2009 with a loan of $400K ( Principal and Interest). We relocated interstate for work purpose in 2017 and rented the property. My current loan amount is around $175K. We together claim tax deductions on interest on current loan amount since it became available for rent.

We are planning to refinance the existing loan and redraw equity credit of around $300K to invest in shares and gold under my partner's name.

Can we claim tax deduction on the interest incurred through refinance against the rental and dividend income?

Do we have to maintain shares investment until the property is paid off?

Many thanks and warm regards.

Existing mortgage

Abizzmal — Fri, 24 Jan 2020 22:15:22 GMT

I have 60k owing on my property and want to rent it out and purchase another. Can I claim tax on the interest on the 60k if I get a separate loan for the new house

User money in offset account for investment property

tomunix — Wed, 22 Jan 2020 12:01:34 GMT

I have refinanced my owner occupied property for $760K (the bank put this money in an offset account) in 2015 to buy an investment property (A). Since then I still used interest from this $760K as cost to deduct the rental income from this property A. Until now, this offset is full of cash as I keep deposit my salary and rental income into it($760K in offset account, I haven't got interest for the last one year). If I take this $760K to buy another property (B) now, I will have to pay interest on this amount. Could I use this interest as cost to deduct from the rental income of property B? Thanks!

Putting a lump sum into my wifes super

Caver — Wed, 22 Jan 2020 00:53:51 GMT

Hi, I have a small investment property (worth approx $160K) that is in my name and I would like to sell and put the money into my wife's Superannuation fund.

I am retired whilst she is still working part-time.

Am I allowed to do this?

Thanks

Peter

Residing in rental property part way through ownership before re-renting out

ConfusedAc — Tue, 21 Jan 2020 04:26:57 GMT

If you purchase a property and rent it out for 5 years, then live in the property for 2 years before renting it out for another 3 years, does the cost base of the property only take into consideration depreciation for the 8/10 years you were renting the property out and could claim dedications for the depreciation, or is the depreciation in the 2 years you lived in the property but could not claim the dedication also taken into account?

Rental Property You Move Into

ConfusedAc — Tue, 21 Jan 2020 03:18:03 GMT

A property is purchased in May15 for $500k with a $5k rebate. Stamp duty, conveyancing costs and title search fees of $15k were incurred. The property is then rented out until May20, at which point the owner chooses to move into the property and make this their principal place of residence. Up until the point the owner moves in, they have claimed depreciation and capital works dedications of $60k. Two years later in May22, the owner decides to sell the property for $475k with stamp duty and legal fees on sale of $10k.

In total the owner would have lived in the property for 2/7 years and rented the property for 5/7 years. They did not own any other property during this time, renting a place to live in themselves during the initial 5 years of ownership.

A.) Can the owner claim this property as their main residence for 7 years or only the 2 years they lived in it?

B.) Would the cost base be:

$500k purchase price - $5k rebate + $15k purchase fees - $60k dep'n/ded = $450k?

C.) Is the capital gain calculated as:

Proceeds = $475k sales price - $10k costs to sell = $465k

Capital gain on sale = $465k proceeds - $450k cost base = $15k

D.) Can the owner claim partial exemption so the capital gain would be:

$15k x 5/7 years rented = $10.7k x 50% CGT = $5.35k?

Loan taken in New-Zealand

Mathieu — Mon, 20 Jan 2020 22:05:44 GMT

Hi ATO,

If I take a loan to purchase a property in New-Zealand, can I claim the repayment of the interest of the loan taken overseas?

I understand I need to declare the income once the place is rented but what about the loan repayment.

Is there anything else I should be aware before investing in New-Zealand?

Many thanks

Mat

Withdraw from investment property home loan to invest in shares

thanhdm90 — Fri, 17 Jan 2020 04:39:49 GMT

Hi,

I'm looking to withdraw money from my investment property home loan to invest in shares. I understand the whole interest is still deductible because it's still investment activities.

For example, I have $300,000 investment property home loan. If I withdraw $10,000 from redraw facility today to invest in shares, my loan balance increases to $310,000 and interest on $310k loan is deductible.

After 2 year, I sell my shares for $12,000 to get cash. Is interest still deductible on $310k loan?

What if I return $10,000 to investment home loan that I originally withdraw and take $2,000 cash. Is interest deductible on the remaining $300k. The loan balance will be slightly less after 2 years.

Thank you.

Claiming food for a holiday rental

KAB77 — Thu, 16 Jan 2020 23:24:24 GMT

Hi, I rent out a place holiday accomodation and provide milk, salt, pepper, coffee, tea, cling wrap etc. am I able to claim these items? Thanks

FHSS Withdrawal

adarsh1489 — Wed, 15 Jan 2020 00:13:58 GMT

I had contributed $8000 towards FHSS on the assumption that I will be occupying my first home. However, I have now decided to declare the home as an investment property. The max super available for withdrawal is $6938 ($8000 less 15% tax + $138 earnings on super). I wish to withdraw my super to help with my deposit any my question is:

"What would be the witholding tax rate that I have to specify considering it is an investment property? My marginal tax rate is 37%"

Investment dwelling to demolished rebuilding owner occupy

Akk — Tue, 14 Jan 2020 23:31:34 GMT

Hi

Im planning on demolishing my current investment property and rebuilding a new dwelling. The new house will be owner occupied.
I brought investment for $280k in 2014 and rented it out immediately.
Currently it's estimated value is $525k

I was wondering if a CGT event will occur and if so, how much will I can charged?

Thanks

How does the 6-year rule apply?

Riiiiita — Tue, 14 Jan 2020 00:26:26 GMT

Hi,

I am a bit confused about how to calculate Capital Gain.

The situation as follow:

Tom is a foreign resident and he purchased a property in 2000 and lived in immediately. Tom moved out in 2003 and the property was rented out till it was sold in 2018. Total holding period for 18 yrs.

As the discount methold wouldn't apply to foreign resident since 2012, Tom get a market value for the property in 2012.

Tom wish to apply the 6 years exemption during 2003 to 2009.

My question is should I use the main residence exemption pro rata for whole holding period 18 years? Or just till 2012.

Thank you for your help.

Cost base on subdivision

doradith — Mon, 13 Jan 2020 05:49:56 GMT

Hi,

Seeking some information and would be grateful if someone could assist.

I purchased my property as PPOR in 2012 (350K). It become Investment Property in 2016 and I got valuation for 500K

I want to subdivide the property into 2 lots by keep exisiting house (assume 50/50 portion).

I understand that if I sold the property as is (without subdivision); I can use the market substitution value method to reduce the cost base. ie: Cost base = 500K (valuation as at become IP in 2016)

50% CGT discount

If I subdivide, build and sell the 2 lots (assume 60/40 portion); which cost base should I use? Is it the original purchase price (350K in 2012) OR the valuation when it becomes IP (500K in 2016)?

ie:

Unit 1: existing house.

Cost base = 60% x 350K (original purchase price in 2012)

OR Cost base = 60% x 500K (valuation when it become IP in 2015) ??

50% CGT discount

Unit 2: new lot

Cost base = 40% x 350K (original purchase price in 2012)

Sell will be consider as income and not capital gain?

If I have capital loss from other asset base (ie: shares), can capital gain from the proceed of these sales be use to net off the loss?

Please advise. Thank you

Rental Property Business and Building Business in Partnership

unicorn — Mon, 13 Jan 2020 02:30:02 GMT

My de-facto partner and I have a registered Partnership, with agreed 60/40 split of profits or losses, operating for past 4 years.

To date the focus of the Partnership has been building work for clients. My partner is a builder, we employ two apprentices, and I do all the bookwork, tax reporting and returns, payslips for apprentices, and some design work for our clients.

We have bought two lots of vacant land over the last two years, with the aim to build investment homes and rent them out. The land is held as joint tenants (50/50 ownership), purchased with loans in joint names, and the money to build the houses will be from loans in joint names too.

This year we have enough equity saved to build these 2 houses, but will do some building work for clients (likely only 20% of year). We have reviewed our situation and now want to sell one of the houses for profit, and keep one as a rental investment.

With the information I've read, I believe that both the rental and build-to-sell homes can be run through the partnership, and the profit distributed 40/60 as per partnership agreement. Correct?

I already own two rental properties which i manage myself, both are in my name alone, so i have been putting income/loss for these two on my Individual Tax Return. Although my partner is not legally an owner, he built both homes and we share all our money. Can I bring these two existing rentals into the Partnership business?

So thats the first question.

Second question is we have recently found another property which we settle the purchase of end of January - this property is already a rentable home, but we intend to renovate it to increase the rental yield, rent it out, and in the future add a second home on the property to rent out as well. My intention was to buy it as joint tenants (50/50), but due to bank requirements, we probably need to put it in my partner's name alone. If the property is legally his, can we still run the rental through the partnership or not?

The total will be 4 rental properties (two in my name) and one joint, one in partners name. I will self-manage all, we have jointly funded the purchase and building/renovation of all. Can i simplify things by running them all through the partnership, or do i need to run some through Individual Tax Returns?

Also, do you think that our activities constitute running a rental business, and if so, how does that impact our tax situation?

If so, will i need to add that to our partnership agreement?

I'm confident of what can be claimed upfront, what needs deferring, what costs go towards calculating cost base for CGT etc.

Except for one aspect, how to treat my partner's "wage" for building the property we intend to rent out, and the "wage" for building the build-to-sell home.

Take this simplified example: the house we intend to hold longer term as a rental, cost for buying land is 200k, materials are 150k, wages for our apprentices working on its build is 25k, wages for my partners time working on it is $40k. I want to include his market-rate "wage"for his time as part of the Cost Base for when we eventually sell this house. But surely the partnership doesn't need to receive this 40k from ourselves, and declare as income on tax return? Can we claim 40k in cost base without paying income tax on that 40k? Or do we leave it out of the Cost Base because we didn't "pay it"?

Second example: build-to-sell home. Same question for the 40k wages in Cost Base. Also we are GST-registered, so intend to use the Margin Scheme to calculate GST payable on the sale, and will be claiming GST on outgoings to build property. How do we manage my partner's "wage" in terms of GST requirements?

Thanks very much for any answers.

Long term rental agreement

Newmom — Sun, 12 Jan 2020 10:20:18 GMT

Can my daughter and I have an Agreement that allows me to live rent-free in her investment property, for the duration of my lifetime? Without risk of eviction?

Tax Treatment of two rental properties on one Title

ftareen — Sun, 12 Jan 2020 05:20:15 GMT

Dear ATO Community

I have an investment property, council allows me to build two dwellings on one Title ( does not allow subdivision as per current rules although the land size is 925 sq meters). I would like to build another house on the block with separate meters purely for rental purposes and to improve cash flow from existing block. I have also renovated existing house requiring new assessment from quantity surveyor.

Question : For Tax submission purposes, can I do one tax filing at the end of the year for this property although the two properties are independent but on one title. Can I get the Quantity surveyor to prepare one depreciation schedule for the entire property or I am required to have two separate schedules considering one building was built in 1986 renovated in 2020 and the second dwelling built in 2020 ( brand new). Looking forward to your guidance. Thanks

Partial CG tax exemption on family home after moving to a new home

Kimnsw — Sun, 12 Jan 2020 00:32:58 GMT

My husdand and i have been living in our current home in Sydney nearly 20 years. Bought at 420k. Now worth around 1.4million. We are approaching retirement and have bought a house in country NSW. We intend to rent the country home out for, lets say, 4 years before moving there to retire. After moving, we intend to retain our Sydney home and let it out so that we have the option of coming back if needs must. However, at some point we may decide to sell the Sydney home - let's say 5 years after the move. What is our capital gains situation likely to be given that we'll have made an income off the Sydney home for a period?

many thanks for any opinions and info.

Main residence exemption

LS_82 — Sat, 11 Jan 2020 03:48:58 GMT

Hi
We purchased a new property 3 mths ago that we moved straight into. We renovated our old property during this time with the intention to sell. The problem is we don't like our new neighbourhood and now that our old house has been done up we would like to move back into it and sell the new one. Are we covered by the 6 mth dual PPOR if we sell new house? I'm wondering because if it becomes classified as an investment property from the start we will need to pay more stamp duty and CGT.

AirBnB income declaration and expenses claim

NeilJ — Tue, 14 Jan 2020 01:32:39 GMT

I am completing our tax returns this year and I am trying to figure out how to declare AirBnB and HomeAway income and expenses. Do I put into Income the NET amount I received in the bank from the agencies or the GROSS amount?

Do I claim the commissions paid to AIrBnB (deducted from the amounts prior to payment to me) - are these expenses?

Here is a example

Payout date	Gross booking amount	Deductions	Payout
1-Mar-19	795.00	43.73	751.27
19-Feb-19	2,370.00	130.35	2,239.65
29-Nov-18	387.49	21.31	366.18
13-Aug-18	280.00	15.40	264.60

Thanks for your help

Is a fixed interest rate loan break cost tax deductable??

AshTaxCom — Fri, 10 Jan 2020 00:04:13 GMT

Hello, i've currently got a fixed interest rate loan on a tenanted investment property and, would like to change it to get a lower variable rate but there is a break cost involved. eg to break the loan it will cost $1500. Can i claim this cost as an expense??

Thanks

Capital Gain Indexation Allowance

atoquestions — Thu, 09 Jan 2020 00:06:17 GMT

Hello,

This question is actually for both personnal and business tax.

When we calculate capital gain, could we take inflation into consideration?

Is there any indexation allowance or method we

Would you mind give me a reference link?

Thank you

Depreciation records when selling an investment property

RoBuckland — Wed, 08 Jan 2020 23:25:01 GMT

I have a number of investment proeprties to sell over the next few years. I have had most of them for years and have claimed depreciation every year and understand that I need to take this into account for capital gains.

My question is about finding the correct depreciation amounts to calculate CGT.

Does the ATO have a record of the total of yearly claims for depreciation and capital works claims that I can access? Or do I need to hunt thru all my old records to work out this figure?

And if ATO does have the depreciation totals for each property, how do I get a copy of them please? I'd like to get the current figures at least, before selling so I am prepared for the amount of CGT to be paid.

kind regards

Rob Buckland

Four Units on One Title

JBOZ80 — Fri, 03 Jan 2020 05:18:14 GMT

Hello!

I currently own a block of old flats where there are four units on one title. I own the property with two other people. All four units are rented (one short term Airbnb, 3 long-term tenants), but I would like to move into one of the units to manage the entire property better as I am there all the time dealing with tenant issues, doing maintenance, gardening and cleaning. I could also remove the need for a Real Estate agent to manage the property as I seem to be doing most of this anyway. I effectively would be living in 25% of the investment property.

As this is four units on one title with three owners, I am wondering what tax implications this would have on myself and the other two owners? Would I still be able to claim 100% of the ineterest of the loan and other property costs (rates, insurance, etc) due to me being there to manage the property? Or would I be unable to claim 25% of all property costs? Could the other two property owners still claim 100% of costs associated with the flats as they are not living there, or would they also lose 25%?

I also understand there would be CGT implications, but not sure if this would affect all three of us who own the property or just me if I ended up moving in?

Any help would be valuably received.

Cheers,

Josh.

Renovation of investment property

paoqiqi — Mon, 30 Dec 2019 09:20:08 GMT

I have an investment property purchased three years ago and rented out from the first day.

Now I am going to renovate it but have not decided whether to rent it out or move in after the renovation.

Question 1

If I continue to rent it out after renovation, all the interests and outgoings during the renovation can be deductible in the current tax year and the re novation cost can be depreciated. Is that correct?

Question 2

If I decide to move in after renovation, this property will become my main residence. Will the interests and outgoings during the renovation period deductible? In the future, if i sell this property, will be renovation cost be part of my cost base (understand the cgt will be prorate between investment period and occupy period.)?

Question 3

If I want to rent it out after the renovation but cannot find a buyer after marketed for 2 or 3 weeks, then I decide to move in. So will the interests and outgoings during the renovation period deductible? In the future, if i sell this property, will be renovation cost be part of my cost base (understand the cgt will be prorate between investment period and occupy period.)?

Thank you!

Acquisition Date of Subdivided Duplex

JMC1 — Fri, 27 Dec 2019 00:28:41 GMT

I am a Personal Investor. Purchased investment property in 2010, and in 2019 built a duplex on thi site. Looking to Subdivide in January 2020, and selling 1 site soon after. For the subdivided properties is the date of aquisition considered from when the property was purchased (2011), or at the time of Subdivision (2020)? If subdivision occurs in January 2020, will I need to wait 12 months form this point to be eligible for CGT concession?

Renting investment property to family

merrik98 — Thu, 26 Dec 2019 23:43:03 GMT

Hi - I am needing to know the downside of renting a newly acquired investment property to a family member at below market rent. I am a pensioner but have just now invested some of my super in a studio to give immediate relief to a family member on a disability pension.There is a mortgage so I will have interest expenses, strata fees etc. The unit is currently tenanted at maket value so I believe I can make tax deductions in this financial year. However, what happens next when I reduce the rent by 50% for family member (all they can afford on DSP)? With my total income, including the reduced rental income, I am eligible now and expect to remain below the SAPTO minimum income so I believe the rental income will be tax free even without claiming tax deductions. I believe Capital Gains tax should also not be an issue provided I do not sell the property & it passes to the family member as an inheritance. What am I missing? Are there any nasty hidden surprises I should be aware of?

CGT

citydweller2019 — Mon, 23 Dec 2019 07:03:51 GMT

We are considering moving to a new home and would like to rent our place whilst we rent in the new location to see if we like that new location. I seek an understanding re the treatment of CGT on our home.

We have been living in the same home for 15 years and have been fortunate enough to see an increase in value of say $1m.

Queries

If we move for say 6 months would the home be subject CGT?
Is there a period where no CGT would be applicable ie if we only moved for say 3 months
Given the depressed market and we would expect no increase in value whilst renting, can the CGT be considered to be zero or would it be over the term of the ownership?
If the latter is the case
1. Would the calculation be 0.5/15 x (Increase in value = $1m) as CGT? ie CGT applied to $33,333

Paying tax on income from UK property

77burd — Sat, 21 Dec 2019 05:47:22 GMT

I am a permanent resident in Aus, from the UK originally.

I want to invest in UK property - potentially! All pending the answer to this question...

Would I have to pay tax on the income in the UK? And then when bringing the money into Aus, would I have to pay tax again?

I think the double tax would squash any profit so keen to know!

Thanks so much in advance

Jon

Foreigners using gold to purchase Australian property

Pablo1 — Sat, 21 Dec 2019 01:18:55 GMT

Assuming that a foreigner is approved to purchase an Australian investment property under Foreign Investment Review Board conditions, is it possible for the property to be paid for in (gold/silver bullion) instead of fiat money?

I realise that stamp duties/capital gains tax ect would need to be paid in fiat money as in any real estate transaction.

Mortgage interest deduction

Taotao — Fri, 20 Dec 2019 05:57:35 GMT

Hello

I am curently taking a mortgage out to buy a investment property. The property and mortgage is under my wife and my name. The problem is that my wife is not working so she has no income to deduct the interest on the mortgage. Am i allowed to deduct 100% of the interest on mortgage under my income since she is not working?

The mortgage has not being signed yet so is it good idea to change it to just my name?

CGT

AshWhitefly — Fri, 20 Dec 2019 04:45:48 GMT

Hi there,

I purchased an investment property in 2014, which was tenanted from Day 1. But I have now sold my PPOR and have not found a new one, so I plan to move into this investment property and treat it as my PPOR so I can take my time in finding my next house.

My question is, does 6 year rule still apply even if I did not initially move into the investment property as my PPOR? If the 6 year rule can apply in my case, does the rule reset assuming I move out later and lease it out, then move back in within 6 years? When I sell the property in the future, will my CGT only be calculated from 2014 to 2019 since the rest of the period is exempt under the 6 year rule?

Regards

Ash

Tax on overseas property.

BobM — Wed, 18 Dec 2019 12:32:43 GMT

Hi,

I need some help here.

I am planning to come back to Australia after 5 years of being overseas and paying my taxes as non resident. I plan to sell my house overseas and bring the money to Australia. I was wondering does capital gain tax or any other tax applies to my situation?

Thanks in advance

Regards

Using my home loan to fund investment property

brownbag — Wed, 18 Dec 2019 03:06:34 GMT

My wife and I are buying and investment property. We own our own home and have a mortgage on it, but it is 100% in offset, so we currently make no repayments and pay no interest.. And we have available funds in there to help pay for the property.

If we use funds in our home loan to cover the costs of purchasing the property, and record everything accurately, can we claim the interest costs of our home loan? Does this apply to purchase of property, stamp duty costs, capital improvements and maintenance?

About property rental income

Mango12 — Sat, 26 Oct 2019 02:34:44 GMT

I have a property and my parent rent it out to someone. My parent signed the rental contract with the person who rented the property. Whose income is the rental? My parent or me?

Rental property losses

CraigS001 — Tue, 15 Oct 2019 02:31:25 GMT

Hi,

I would like to get some clarity on how net rental property losses and prior year carried forward losses are applied. Here is an example that discribes my scenario:

I earned a salary from my employer of $10,000 in the current year

I incurred a net rental property loss on my property of -$8,000 for the current year

I have carried forward losses on my rental property of -$20,000 from prior years.

If I was an individual that only earned a salary (ie no rental properties), then I would not be liable for any tax on my $10,000 per annum salary as it is below the taxable income threshold. Do I then still have to apply the current year's rental property loss to my taxable income, effectively reducing my taxable income to $2,000... or can the loss on rental property be carried over to a year when I would have tax payable?

Following on from that, do I then have to apply my carried forward losses to the remaining txable income of $2,000, thereby reducing my taxable income to zero... or can the carried forward losses be carried over and only used when I have tax to offset it against?

The reason I ask is that I am effectively utilising rental property losses to reduce taxable income that I wouldn't be liable for tax on anyway? Whereas next year I expect to earn a salary of $100,000 and would like to apply the carried forward losses to reduce an actual tax liability.

Thank you

Foreign Rental Income

aftab1975pk — Mon, 09 Sep 2019 09:08:22 GMT

It is a well known fact that australian residents need to declare their world wide income in the Australian Tax Return. I need to know the following with regards to foreign rental income:

1) What if the foriegn rental income is earned from a country which does not have a double tax treaty (DTA) with Australia. Will the tax payer still get a credit for the foeign tax/foreign income tax offset (FITO) that he paid? If not, then isn't it double taxation?

2) Which exchange rates should the taxpayer use if the ATO wesbite does not provide the exchange rates for that particular country?

Cheers

Rental income from children

Caren — Fri, 29 Jun 2018 21:13:58 GMT

Background information;

I purchased a home in Brisbane in 2003 and lived there till 2012 with my 2 school aged children. I have sinced purchased another home elsewhere that I live in. Both my children where unemployed but studing at Tafe till 2015. My children work now and pay rent and have in the past couple of years also rented out other rooms in the house which I received rent for. My children are now the sole occupance of the property and continue to pay rent to me. I had the double garage built into a studio and passed with council approval, while it is attached to the house it has it's own separate enterance with no other access to the main house. I also have this rented out to a person who pays rent to me.

I have not worked since I was retrenched in 2011 from a Government position, I have not claimed any benifits from the Government during this time but supported myself with what rent I received from my property in Brisbane and a granny flat I have at the house I now live in.

I have lodged my tax returns each year with the rental income I received.

My question is;

While I understand rental income must be declared and the rent I receive from the studio and granny flat is from non family persons, that is clear to me, where do I stand with the spasmodic income I receive from my children still living in the family home?

New Zealand Rental Income

apurva_k — Tue, 12 Nov 2019 04:43:00 GMT

Hello,

We moved to Australia last year on work visa. We have a house in New Zealand. This is currently on rent, since that was the best option availabe that point in time. Now we have been granted permanant residency here in Australia.

I am aware we have to declare overseas income while filing return. My question is on the DTAA between Australia and New Zealand. How does the provisions of the DTAA impact the rental income/loss. I do not have any other income in NZ.

Can you guide in this?

Divide rental income

HHM — Mon, 08 Jul 2019 13:10:25 GMT

Hi,
My wife and I have a rental property, and the deed is in my name alone.
My wife receives the rent and manages all the rental issues with an agent.
How should we divide the rental income as for tax purpose? All in my name or 50/50, or all in hers?
Thanks.

New Rental Property

SRH — Thu, 25 Jul 2019 07:56:32 GMT

I bought a property in May 2018 for the purpose of investment. It was a quite run down 1880s rural house, and I was doing rennovations throughout 2018/19. It didnt earn any income during FY2018/19, but there were costs - a range of subcontractor bills, small to large. I would say most were largely essential repairs, maintenance, removal of rubbish, painting, plumbing, but some were for new bathroom fillings, airconditioning, etc - individually most costs were under $5K, but collectively they amount to about $150K spent over 12 months. For the past three months there was also a small mortgage against it. It will be let out for rental in August 2019. What is the correct way to handle these costs in my 2018/19 tax return ? Thanks

Real estate + rental income tax question

werogatda — Thu, 29 Aug 2019 05:03:11 GMT

Gday all, I've got a real-estate related tax query. Hope someone here can help me.

We bought a house in South Melbourne in 2010 for around $1m. Lived in it for 7 years, then moved out in 2017.

Rented out for 1 year in 2018. Had to stop rental after a year due to house repair requirements. Assuming value of house in 2018 (at the start of rental) was $1.5m

If we do not rent it out anymore, keep it vacant, and reoccupy the house in 2023 (therefore making it my main residence within the 6 year period), and sell the house in 2023, how much CGT would I be paying? Assuming the house sells in 2023 for $2m.

My guess:

Capital gains, calculated from start date of rental (2018-2023): $500k

House is used for rental only for 1 year out of 6 years (2018-2023), so capital gains for 1 year = 500k x (1/6) = 83k

Since house was owned for more than 12 months before rental, 50% discount on capital gains applies. 83k x 0.5 = 42k

CGT applies on $42k, rest of capital gains is exempt from CGT

Would this be accurate? cheers guys and good day to you all

Andrew

Can you a landlord report a person to ATO, if the he/she hasn't paid rental arrears?

subbu176 — Wed, 23 Oct 2019 02:25:03 GMT

Hi all,

I lived in Westmead from April 2018 to February 2019 and in Parramatta from February 2019 till October first week. Both places, it is the person whom I paid rent to. They took the house on lease and sublet to us. I have no rental agreement nor rental bond receipt number or rental receipts. I have paid all rent in regards to Parramatta accommodation. They are having 3 weeks of bond amount received for the Westmead accommodation. Due to sudden loss of employment and other health issues, autodebit of rent for few weeks for the Westmead accommodation did not go through. I didn't say I will not pay the arrears, but have requesting some time. Which they are not providing considering my professional and financial & health conditions. They have been torturing and harassing me mentally literally every day. As a result I ended up in hospital for a week. I had been visiting hospital every fortnight and spending huge amount of money, which is beyond my capabilities. Around mid September the person verbally gave notice period of 4 weeks saying look to move somewhere else. So we housemates, started looking for accommodations. Unfortunately due to a family emergency back home I had to leave for overseas (I am still in overseas). It may take a month or two to return. Now the person has asked his/her brother who in turn has consulted a lawyer and has sent me an email in a threatening manner. Which says we will write off the debt but will report to ATO, which will affect your credit check or we will proceed legally which may cost you more. What should I do? Is there a chance of them going reporting it to ATO? I am not saying I wont pay. All I wanted some time because of my current situation. Need your suggesstions.Thanks

Property Transmitted to Executors Prior to Sale. Is Income Tax on Rent Still Paid from Estate?

AlanM — Thu, 04 Jul 2019 05:37:06 GMT

Prior to sale, the names on the title of a house and land has been changed to the names of the executors. Does income tax paid on the rent received after the name change contine to be paid from the estate? The joint executors of the deceased estate in this case are also the beneficiaries.

Refinancing an Investment Property Loan

taylor5555 — Mon, 12 Nov 2018 10:24:51 GMT

I am looking to take advantage of the current low interest rate environment. Loans against our primary residence are 0.2% to 0.4% better than loans for investment properties. Am I able to refiannce my existing investment property loans, changing only the security from the investment properties over to my primary residence, in order to take advantage of the cheaper interest rates, and still be able to claim full tax deductibility for my interest expense. I note that the amount and the purpose of the loan has not changed, and I am not buying or selling any properties - just refinancing and changing security.

Holiday house rented out airbnb

CK1 — Thu, 22 Aug 2019 09:33:54 GMT

We are renting out an investment property via Airbnb. It’s a Townhouse, approx 30 km from our residence. We do have a cleaner, but we do pick up, wash and drop off the linen, provide supplies and generally check the place out after each guest.

Can we claim travel expenses for those trips?

Claiming expenses & interest during construction period, but not rented out

sunbala — Wed, 07 Aug 2019 10:09:20 GMT

Hi There,

If the investment property is not ready for rent during the financial year, can I claim the expenses & interest during the construction period.

Please assist.

Expenses that can be claimed by 1 part of a Tenants in common from other half...

macfanboy — Thu, 26 Apr 2018 06:55:39 GMT

Bill and his brother Ben each have a 50% share of a property they own as tenants in common.

Bill owns another property which he resides in, while Ben resides in their jointly owned property.

Ben pays Bill $200 per week in rent.

The commercial rate for similar properties in their area is $400 per week.

Can Bill claim any expenses against this income?

Would they be at most $200/2 =$100 per week?

Tax deduction for renting to relatives

Jenny1 — Thu, 15 Feb 2018 03:59:35 GMT

My parents and three adult brothers live with my new wife and I. I have a large house with 6 bedrooms and 3 bathrooms and it has been the family home, but is now in my name only. For tax purposes can I rent out most of my home to them and claim it as a rental property. Can I declare the income and claim 5/7ths of the deductions?

Is there anything else I should think about in relation to this or capital gain?

Thanks

CGT after changing from Owner to Investment

Mahesh1 — Thu, 10 Oct 2019 06:12:33 GMT

I am building a new house to move in and will be renting out my exisitng property.

Will I need to pay Capital Gains Tax if I were to sell the rental property in 5 years?

Capital Gains Tax - Principal place of residence to an investment property

DMS — Tue, 22 Oct 2019 00:04:52 GMT

Good Morning,

Can you please explain to me how the CGT works on a principal place of residence, which then became a rental property, which we are considering selling? Is it calculated on the marketable value on the date it was first tenanted, then any depreciation, improvements etc, deducted?

Thanks for your help.

Buying a second home to move and Rent the first residential home

Saber — Thu, 20 Jun 2019 05:34:25 GMT

Hi,

Got a question that couldn't get an straight answer so far! Appreciate if someone could help!

We're a 9 to 5 working couple and only got one residential house which paid off and mortgage free. Now we're thinking of getting a mortgage for buying and moving into a bigger & better house and rent the existing one but don't know what the tax implication of that would be? I can only guess that ATO would tax the rent but I'm not sure whether I can make a deduction claim on the interest we'd be paying for the second house?

Do banks normally consider the second one as an investment or residential?

Thanks!

CGT for sale of overseas property

PN — Mon, 08 Jul 2019 09:23:56 GMT

Greetings everyone, I have a question regarding paying capital gains tax in Australia following the sale of my property that is located overseas.

Background:
I moved to Australia from India in April 2017 on a spouse visa (309). At the time, I owned a property in India. When I've filed tax returns in Australia for FY17 and FY18, I've included the rental income from this property. I sold this property two weeks ago, before 30 Jun 19.

Questions:

For my FY19 tax returns in Australia, do I need to pay capital gains tax (CGT) on this overseas property?
If so, how do I best determine the capital gain amount? Based on reading the ATO community forum thread here (Link) it states that I would have to pay CGT on the difference in value of the property between April 2017 and the time of sale. There was no valuation of the property conducted in April 2017, so I am not sure of the exact capital gain amount.
I am currently planning to invest proceeds from the sale of this property into buying Indian government bonds. The Indian Tax authorities provide a CGT exemption to anyone reinvesting proceeds from capital asset sales within their country. Are there similar provisions in Australia for reducing CGT?
If I have no plans of transferring the funds from the sale of the property into Australia, am I still liable for capital gains tax in Australia? Thank you all for your help.

Travel expenses on Residential properties - CGT Cost base?

J380469 — Fri, 23 Feb 2018 05:35:00 GMT

As from the 1 July 2017 travel expenses relating to residential properties are no longer deductible.

Does this now mean that these travel expenses are added to the cost base of Capital Gains Tax when disposing of the property?

I travel 2 3/4 hours each way to do cleaning and repairs and maintenance on my short term rental property several times a month and pay a fortune in fuel, at least $80 round trip each time, there must be someway that this can be claimed back?

Borrowing for an investment from mortgage redraw

Nikhilesh — Thu, 22 Aug 2019 13:49:34 GMT

Hi ATO Community

I've made some poor choices when I had to relocate for work and rented out my apartment, instead of putting extra savings in the offset account I put it in the redraw, not having understood I could have claimed a interest tax deduction if I had. My employer let me see a financial planner before I relocated but they didn't explain this and said I should pay off my debt asap, which I did except for $1 of the loan balance.

After returning home in August last year, I moved back into my apartment, but redrawed the money to purchase a home to live in as my family had expanded. Now the apartment is an investment property again. I've got some extra money that I'm keeping in the loan/redraw account of the investment property. I'm aware I can't claim a tax deduction on any interest paid on the apartment as I've previously reduced the loan balance to $1. My question is if I redrawed money from the apartment account for an investment purpose, then would I then be able to claim interest paid on the apartment as a tax deduction?

Any advice appreciated.

Overseas property - run at a loss... must I declare?

McGinty — Wed, 04 Sep 2019 02:44:38 GMT

Hi all,

I have a house in NZ. Both the property and the mortgage are in my name.

My dad lives in the property and we both contribute to the repayments of the mortgage. I also pay the rates and insurance in full.

There is no tenancy agreement and my net position is that I make a significant loss on this property each year.

Given the property is in my name, do my dad's contributions count as rental income that I must declare?

Family living in primary residence.

Kimberlyyy — Mon, 16 Dec 2019 10:12:39 GMT

Hey guys and girls.
I was just hoping for some insight. I was hoping to purchase a home for my sister and her family to live in. It will be in my name and my primary residency as I won’t own any other property. I don’t plan on charging her rent. I just work in a different state and spend most my time there and will like to have the place to stay when returning and would also love to help them out. Do you know if it would be a CG issue when selling? Might be tricky proving i live there as I spend most my time in another state. Or would it be ok as I wouldn’t buy another property. Thank you.

Calculate capital gains tax on sale of investment property

mariajacobs — Mon, 16 Dec 2019 07:28:19 GMT

I am asking this question on behalf of my friend who purchased an investment property for $400,000. The investment property was rented for approx 17 years. Her partner and her own another house and she has been living in this home with her kids, ever since she separated from her partner in Nov 2018. She has been paying the mortgage on this house.

Her partner has been living in the rental property when they separated and paying the mortgage on the rental property. My friend and her partner are now planning to sell the investment property, as they are getting divorced. How much capital gains tax would they need to pay when the property is sold? The agents have given her an estimated sale price of $650000 for the investment property.

Her partner earns $75000 and she earns $50000.

Any assistance would be greatly appreciated.

How long do I have to live in my rental property to avoid CGT

christinerayner — Sun, 15 Dec 2019 00:17:59 GMT

Is there a length of time I can return to my investment property to avoid paying Capital Gains Tax.?

This was my principal home of residence for over 3 years before I rented it out in 2011

Investment property renovation spend limits

ftareen — Sat, 14 Dec 2019 22:28:27 GMT

Hi ATO Community

We are looking to renovate our investment property, is there a limit to spend on renovation that could be later added to cost base for CGT calculations and depreciation. Since this is the only property we have, we intend to live in it for 1-2 years while we look for a PR for ourselves and then rent it back again, hope that does not affect the spend on renovation for future depreciations etc. Thanks

Repaying Loan

prathej1 — Sun, 08 Dec 2019 23:03:14 GMT

I have 2 loans.

1 for my main residence and 1 for my investment property.

I was thinking of redrawing on my main residence (lower rate debt) to pay off my investment property debt (higher rate debt).

The purpose of this would be to consolidate my debts with the 1 bank and reduce overall Interest cost.

Will doing this impact my ability to deduct interest on the investment property? I was planning to in the future only deduct the portion of my main residence debt which was used to repay the investment debt (adjusted for ongoing repayments).

GST on sale of subdivided main residence

RRigali — Sun, 08 Dec 2019 12:54:10 GMT

I'm proposing to subdivide my main residence of 32 years.

The intent is to downsize to a smaller home. One lot will be retained and a smaller house buit on it and the other lot may be sold to fund the rebuild of the main residence.

The sale of the 2nd lot is subject to GST however, I have been told that as my property has been my main residence for 32 years, a concessional rate may be applied to the GST payable.

Is this correct? How do I find out for sure and what the concession might be?

Questions on income tax and Capital Gain Tax stemming from NZ rental properties

fumanchu — Sat, 07 Dec 2019 23:21:31 GMT

I recently asked a few questions (still awaiting the answers) but I have more questions, hence starting another thread here. Basically, I’m an Aussie living in NZ for the last 20 years where I have created a NZ property portfolio. I am an Aussie citizen (by birth) but obviously haven’t been a resident in Australia for a really long time. I am considering moving back to Australia. My questions:

The top tax rate in NZ is 33cents in the dollar. The top tax rate in Oz is 45cents in the dollar, so there’s obviously more tax to pay in Oz when earning high money. I have read the following “New Zealand currently has double tax agreements with many countries, including Australia, which outline the treatment of tax in order to prevent double taxation and provide tax reliefs for individuals who are tax residents in more than one country. Earnings from New Zealand properties will only be taxed in New Zealand, and will not be taxed again in Australia. When you dispose of your New Zealand investments, any capital gains realised will be taxed in Australia if you are an Australian tax resident, as New Zealand do not currently tax capital gains.” I am unsure about the validity of this statement re. NZ rental income not being taxed in Oz. When I’m an Oz tax resident, is it true that I am only taxed in NZ (which will be taxed at 33cents) and not in Australia (at 45cents), i.e. after submitting my NZ tax return at 33cents/$dollar, does this fully satisfy ATO, or do they only give me a certain degree of tax credits, and expect me to pay the tax difference based on Oz tax rates of 45cents/$dollar (essentially meaning that the above quote is incorrect and I really am taxed in Australia on the earnings of my NZ properties)?
I have been told by a fellow Aussie who created a NZ property portfolio, and actually moved from Oz to NZ in 2016 due to more favourable tax conditions, that the top tax rate in Australia is (or was) actually 0.52 cents/$dollar. They said “the $0.52 tax rate includes some budget repair levy that came in in 2014-15 and some other add on taxes which might have come off now”. Is that correct? Are there other bits which effectively make the top tax rate in Australia 0.52cent/$dollar, or is it just 0.45cents/$dollar like I see online?
I see here (https://www.ato.gov.au/General/Capital-gains-tax/International-issues/Changing-residency/) a comment about short term residents being exempt from CGT; that is people who have been resident for less than 5 years in the previous 10 years. Two questions about this:
- Do returning Australian citizens (by birth) qualify for this exemption if the other conditions are met?
- Does this rule mean that if I move to Oz and lived there/was resident for 4 years and during the 4th year while still resident in Oz, that if I sold NZ property, that I am exempt from CGT because I was an Oz resident for less than 5 years in the last 10? Or do I actually need to leave Oz residency in the 4th year to qualify, i.e. does the exemption rule apply for current Oz residents during their first 5 years of Oz residency?

Thanks in advance.

Rental property special levy

Jeffreyleo — Wed, 04 Dec 2019 08:25:25 GMT

Hello.

I have a rental property. Last week the property manager informed us, and saying that because the wall of property contains combustible cladding, which is against law (both on the law at the date of construction and law for now) , and need to be repaired. They ask to raise a special levy. The levy is used to ask the constructer to repair the wall. Another thing to mention, the insurance contract with the constructer is due to expire early 2020. If the constructer refuses to repair, the money will be used to sue the constructer.

My question is: When in tax time next year, can I claim deduction for the special levy? And if yes, what's the procedure for claiming, how much I can claim?

Thank you in advance

Are initial furniture costs and renovations claimable for short term (airbnb) letting?

RickO — Tue, 03 Dec 2019 22:47:26 GMT

I am buying a flat that we plan to put on airbnb for short term rentals. The sale should complete in about 3 weeks and we want to furnish it for letting out in January, then we would like to do some renovations in February.

So, plan is to:

- Buy furniture before completion

- Let it out for a month

- Do the reno work

Will all of the above count as claimable costs come tax time? (I heard that for long term rentals you have to have let it out first before at least the reno costs are claimable.)

Negative Gearing claim

Investor62 — Sun, 01 Dec 2019 23:51:39 GMT

I am buying an investment property and want to take advantage of negative gearing. I have applied for a loan but the finance company are really slow and may not get the loan documentation ready by the settlement date.

I do have the funds to pay for the investment property outright, however, I would like to take advantage of negative gearing by taking out an investment loan and use my savings for other purposes.

If I paid outright for the property using my money at settlement and when the loan funds come through, have them paid to me (effectively re-financing my own funds), can I still claim the interest on this loan?

The purpose of the loan has always been to buy the investment property, it's just the timing of everything that has gone awray