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Buying a second home

Discussion in 'Real Estate' started by pearls, 20th Aug, 2012.

  1. pearls

    pearls Member

    Joined:
    20th Aug, 2012
    Posts:
    17
    Location:
    qld
    Hello, we bought a small unit last year and lived in it for 1 year (received first home buyers grant) and now moved into renting unit as we needed something bigger than that, now we have rented our own unit, I was just wondering if I have to pay tax against the rent I am receiving for my own unit(now that I am living at a rental unit and the rent im paying is about 30% more than my own unit)?? does the rent im receiving comes under second income?
    Also, I will be greatful if you could suggest about buying a second home/unit by taking one more home loan, is it wise to sell our unit first prior to buying the second or wise to rent it and buy the second??we couple are both working full time jobs with a very good pay (but do not have sufficient savings as we are clearing our credit card debts which will be done soon)

    what is the best option for us to get tax benefit in buying a second home?

    Kindly suggest!!

    Regards
    Pearls
     
  2. Terryw

    Terryw Well-Known Member

    Joined:
    9th Jun, 2006
    Posts:
    653
    Location:
    Sydney
    Yes, the rent you receive will be income - even though you are paying rent yourself.

    But any expenses associated with the unit will generally be deductible against the rent. eg rates, insurance, interest on the loan etc. A major deduction many overlook is depreciation. Get a quantity surveyor in for a depreciation report.
     
  3. pearls

    pearls Member

    Joined:
    20th Aug, 2012
    Posts:
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    Location:
    qld
    Thank you so much for the reply, could you also please suggest on buying a second home prior to selling the first unit too.
    which way would be beneficial for us 1. selling the unit we own and buying other or 2. Renting the first one and buying second home

    Thanks again

    Regards,

    Pearls.....
     
  4. Terryw

    Terryw Well-Known Member

    Joined:
    9th Jun, 2006
    Posts:
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    Location:
    Sydney
    Your first home can remain CGT free for up to 6 years while you are absent as long as you have no other main residence.

    Therefore if you buy a new home one of them will be subject to CGT. This is not necessarily a bad thing, but needs to be taken into account.

    Also you would probably need to borrow against the first house to buy the second. This would mean you have a high mortgage on the new main residence and therefore would be paying high interest which would not be deductible.

    Again this is not necessarily bad, but it may work out cheaper to sell the first one and buy the second one and the later invest in another investment property.

    It will all depend on the figures, your intentions and the future capital growth rates.
     
  5. pearls

    pearls Member

    Joined:
    20th Aug, 2012
    Posts:
    17
    Location:
    qld

    Thanks so much, all doubts cleared :)

    Best Regards,

    Pearls