[IBakeBoys]

We're in Vic and looking to purchase our first home. We had started negotiating with the agent on one particular property when the vendor informed them they had decided to put in tenants for 6 months starting the next day (rented privately, not through any agent - you could tell the agent was very taken aback and not at all impressed. If I hadn't made an offer then they wouldn't have found out until after the tenant moved in the next day)

We currently have a health care card so have an exemption from paying stamp duty. However if they consider the house to be an investment instead of a PPoR then we become liable for stamp duty.

If the SRO allow us to keep the stamp duty exemption, then does that mean that we can't claim any tax deductions for the interest payable on the mortgage until we can move in (ie, to help offset the rent we would be receiving) looking on the ATO website it said that you can claim deductions up until your intention to use the property as an investment changes. Is that a fancy and complicated way of saying while there are tenants there and you're getting rent? Or as we're intending to move in as soon as the tenant is out we're not intending it to be an investment at all, therefore no deductions.

I'm so bummed, we were excited to finally have property negotiations looking like they were going to go in our favour and now theres all this to complicate things even further. I don't even know who to go to for help? I guess I'll be calling SRO and the ATO tomorrow to figure it out? Any advice from property buying veterans so I can start to wrap my head around it before then?

This post has been edited by IBakeBoys: 12/11/2012, 06:15 PM

[Wyn99]

Why don't you negotiate a 6 month settlement so it's not an investment property, but your residence. Current owner gets to collect rent for 6 months and you don't have the stamp duty issue or problem of being a landlord for 6 months. Also if the tenants trash it then it's the owner's problem to fix before you settle.

[Allie_D]

Why don't you negotiate a 6 month settlement so it's not an investment property, but your residence. Current owner gets to collect rent for 6 months and you don't have the stamp duty issue or problem of being a landlord for 6 months. Also if the tenants trash it then it's the owner's problem to fix before you settle.

I'd try and do this too.

[emnut]

It at least used to be the case that as long as you move in within 12 months of settlement it is your PPOR so you would still qualify with a 6 month lease.

[IBakeBoys]

That was the first thing we thought of however DP is due for a payrise in January which might loose us the HCC and therefore stamp duty exemption, meaning we'd have to come up with an extra $10 - $15k which we couldn't do, especially ontop of allt he concessions we'd lose with the HCC (kinder fees, gas, elec, prescriptions, rego etc)

I don't mind paying the stamp duty if we loose the HCC, but in this instance it means we'll not be able to afford the house anymore

[protart roflcopt...]

Would the rental income impact on your CLB and health care card eligibility? That might be a consideration too.

But yes, you can claim deductions on outgoings necessarily incurred in gaining or producing the rental income if you own it while it's rented out or available for rent. Not capital expenditure though.

eta; wow, didn't realise how many concessions you got with a HCC, being one of the middle income working poor myself.

If you can't afford the house without the HCC, maybe save up a little longer. The mortgage stress if the rates go up could be too much for you.



This post has been edited by ossim roflcopter: 12/11/2012, 06:42 PM

[Madnesscraves]

I'd start looking for another house OP

[IBakeBoys]

Would the rental income impact on your CLB and health care card eligibility? That might be a consideration too.

But yes, you can claim deductions on outgoings necessarily incurred in gaining or producing the rental income if you own it while it's rented out or available for rent. Not capital expenditure though.

The rental income would loose us the HCC and change our FTB etc but that would only be after settlement, ie. after we get the stamp duty exemption or not. But we're teetering on the edge of loosing it now anyway so I'm about 90% sure we'll loose it in the new year so that doesn't bother me too much. And that would be spread out over the year, not just hit us in o ne lump like loosing the exemption would. Just wanted to jump into the market while we had it (exemption) if possible - prices are down, stamp duty exemption and cash in the bank are working in our favour - apprentice wages and 4 kids not so much! Should have known it wouldn't be easy!

We're still way under what we can service on a loan, an in addition, DP will be qualified in 12 months so we'll see a *ahem* significant payrise then! SO I don't think mortgage stress will be a problem. Banks are pretty strict with what they think it costs to raise 4 kids and we do it much cheaper than they claim the minimum is - economies of scale!

This post has been edited by IBakeBoys: 12/11/2012, 06:49 PM

[Phascogale]

I'd also be looking for another home.

Rental properties can become a headache unless you are prepared. It's also a private rental, not one going through an agent unless you change that once you become the owner. That might be a headache in itself.

This may not be the house for you.

[libbylu]

Since when does having a HCC exempt you from stamp duty......I never heard of that?!? Is that the case even if it is not your first home..i.e. if you are selling your home and buying another so it will still be your principal place of residence?

This post has been edited by libbylu: 12/11/2012, 08:15 PM