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Live in Investment Property: Mortgage, Tax...

Discussion in 'Real Estate' started by ABlondie, 20th Nov, 2015.

  1. ABlondie

    ABlondie New Member

    20th Nov, 2015
    Sydney, NSW
    Hi everyone,

    I am a newbie and just signed a contract to buy a property and i need your advise urgently. Here are some backgrounds:

    - Loan: Investment Property - so we can afford the property (Interest is higher)
    - Deposit 10%.
    - We now want to live in it and still keep it as Investment Property with the Bank, and will not have any income from the property.
    - We won't be claiming any expenses or Negative Gearing from it at all.

    Now here are our concerns:

    1. Would we have any problems with Tax Office ATO? eg. paying extra Tax...?

    2. Would the bank care and find out that we are actually live in it? And does it affect our Mortgage?

    3. What does it take to change it to "Owner Occupied" Mortgage later with the same/other Lenders?

    4. When buying Home & Content Insurance, we will put it as "Owner Occupied", when making claims, would Insurer find out that it's an Investment Property and decline the claim?

    5. When selling the property, would we have to pay Capital Gains Tax even we live in it the whole time?

    I am sorry for asking many question. This is our first home and we couldn't seem to finds full answers to these.

    Any advice, explanation will be greatly appreciated.

    Thank you very much.
  2. Corey Batt

    Corey Batt Finance Strategist

    12th Apr, 2016
    Adelaide, SA
    Basically you're claiming a property as an investment property when in reality it's a principal place of residence, to overcome a borrowing capacity issue.

    Lying to a bank is a bad idea and is an offence - definitely wouldn't be suggesting that's a good idea at all.
  3. Terryw

    Terryw Well-Known Member

    9th Jun, 2006
    1. If you are living in it and not claiming anything then there would be no tax issues
    2. Yes. You are telling them you will be renting and you won?t be you may be actually tricking them into lending you when they otherwise wouldn?t have. It doesn?t affect the mortgage, but it may be a breach of the loan agreement you have with them.
    3. Some lenders just require notification with no proof, others want proof that you live there. Once settled they wouldn?t do another serviceability assessment I think.
    4. It seems it won?t be an investment property as you will be living in it.
    5. Only if you don?t meet the main residence exemption requirements

    As Corey mentioned, it seems you may be committing a criminal offence known as ?obtaining a financial advantage by deception?. You have to consider whether you should take the risk of getting caught and if so the likely ramifications.