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Considering a weekender.

Discussion in 'Property Finance' started by SueA, 9th Mar, 2016.

  1. SueA

    SueA Well-Known Member

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    Hi All,
    Hubby and I are looking at a weekender 2 hours away on a few acres, has a rough accommodation and power connected for about 80k total. Wouldn't be rented out .May not even reconnect the power for awhile. As we won't be living it in , would it then be classed an investment for stamp duty purposes, and if and when sold liable for cgt. Have enough in an offset to buy , so for cgt can I keep receipts for all my interest payments, s/d, legals , rates etc to help with cost base, or should we use mostly cash and 30k out of offset, and pay this off before our deductible properties .I expect with our working on it over time it will increase in value. Or is it just a bad idea . Thankyou
     
  2. Simon Moore

    Simon Moore Mortgage Broker - Melbourne Business Member

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    Hi SueA,

    Unless it is being rented (producing income) or you are looking for someone to rent the property it unfortunately can't be counted as an investment for tax purposes. That means if you currently have money in your offset account against investment properties, you would be better off using that to purchase the property as that interest expense you are no longer offsetting would now be tax deductible.

    You can however have the property available to rent as a holiday home for part of the year (I have seen some clients do some interesting stuff with Air BNB that I'm sure the ATO will be onto in the next few years!), and use it as a weekender in the other part of the year. Under this scenario a percentage of the expenses are tax deductible depending on the amount of time it's available/is being rented out.

    As for the stamp duty, can someone from QLD answer that one? We don't have different stamp duties in Victoria!
     
    Last edited: 10th Mar, 2016
  3. JDM

    JDM Well-Known Member

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    From what you have said it is unlikely that you will be eligible for the home transfer duty concession (especially if you have another property that is your 'home'). Full transfer duty will likely be payable (ie same as an investment).
     
  4. SueA

    SueA Well-Known Member

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    The shed would never be rentable so no ever intention of renting it out. Just to use on occasional weekend for us and kids families. My reason for asking is when I use the qld stamp duty calculator my choices are only o/o or investment. As never to be o/o, must be classed as investment. Thereby making it a cgt event when we sell. I do not wish to include in tax or claim anything. But after years of ownership if I sell, can my loan interest, legals ,s/d ,etc be added to my cost base to reduce cgt.
     
  5. tobe

    tobe Well-Known Member

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    No.

    Another alternative is to make the property income producing in another way. Such as agistment for farmers etc. otherwise it's suck it up.

    Nb, last year I decided to purchase an onsite caravan instead. Closer to Melbourne than a block, closer to beach and lots of kids around to play with. I'll miss out on any capital growth, but I'll also miss out on repaying a mortgage. Site fees are comparable to what I'd pay for rates and water etc.
     
  6. albanga

    albanga Well-Known Member

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    I am no guru but you can only claim one PPOR at a time and you basically choose which this is (understand technicals around this) so given this holiday home is not likely to have much CG then you would definitely claim your current main residence meaning you would pay CGT if/when you sell this.
    So I would safely assume all these things could be added to the cost base. Technically given it is earning 0 income I imagine by the time you sell it it would have 0 capital gain. It would have cost you more to own it?
     
  7. Biz

    Biz Well-Known Member

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    Out of interest have you ever owned acreage? You might find your weekend away is a weekend of sitting on a ride on cutting grass.
     
  8. SueA

    SueA Well-Known Member

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    Thanks guys,
    Tobe: Only 2.5 acres so useless for agistment, suits us with river a few minutes away and forestry tracks for motorbike , creek on property,( that had a large brown snake beside) don't care if we can't claim anything at end, but would take it if it was there.
    Albanga: Haha, holiday house, old shed, dirt floor, bucket loo, but we can with a lot of work over time make it a good place and based on prices around will definitely make some profit. I assumed similar to you for cgt base. Rates are about 700 a year, so not too much to hold,.
    Biz: Live on 3/4 acre now, that I only take about hour and a half a week to maintain, but yes that is one of our thoughts, if only there every third week, have to pick up branches, then mow, Could make it a rule, whoever uses it mows it.
    Put in an offer, owners daughter wants selling price so will sit on it for awhile, not prepared to pay top dollar as a lot of rubbish , tyres, motors, trailers etc on site to be cleaned up.
     
  9. RumpledElf

    RumpledElf Well-Known Member

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    I'm buying a weekender at the moment. It was very cheap vacant land, and I'm going to try and spend as little as possible building a small house on it. I rent though, so this becomes my PPoR and I'll be there full time once my eldest kid has finished high school but just weekends and holidays until then.

    The only dodgy I want to do is move my car rego up to there. The car was bought with the intention of leaving it on a country property, I just ended up buying both the car and the land sooner than I was planning because they were there and cheap. Still debating the wisdom of leaving it parked up there, it'll be very handy having a car in the country but its much cheaper and faster and more relaxing to catch the train there so once the car is up there, it stays up there even though I won't actually be living there per se for a while yet.
     
  10. SueA

    SueA Well-Known Member

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    Info from ATO.. If you have acquired land either for private purposes or as investment it is considered a capital asset subject to cgt. But if you purchase the land for use in a business activity it is considered trading stock.
    Vacant land that is a capital asset is subject to the same cgt rules as other properties. When you sell it , you'll need to work out your gain or loss and pay tax on gain.
    Keep records of the date and cost of obtaining the land, and your ongoing expenses, such as council rates and loan interest. These expenses can be added to the capital cost of the land for purpose of working our gain or loss when you sell it.
    As said above, you cannot claim tax deductions for expenses because it does not generate income,you have to wait until selling. So it will be better for me to use borrowed money and keep copies of interest paid, legals, rates etc for when we sell.
    Buying land to build a rental/dwelling on has different rules.
     
  11. chindonly

    chindonly Well-Known Member

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    So what if you did have a holiday home / unit available for rent say 90% of the time, and in a letting pool. Can deduct 90% of expenses etc, not the other 10% I assume.
    Do they give you access for personal use if its in a letting pool?
     
  12. bob shovel

    bob shovel Well-Known Member

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    Can you talk to an accountant and set up a business (that does poorly :D ) as a "bush walking event organiser" or along those lines.

    That way you can use the company credit card for the food and beers for the weekend plus fuel out there and other expenses. ;)
     
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  13. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    It wouldn’t be owner occupied
    No main residence exemption
    No interest to add to the cost base if you will be paying cash (but indirectly incurring interest on the non deductible home loan). You might be better to pay off the PPOR debt and borrow to buy. Interest won’t be deductible, but you could use it to reduce CGT.
    Don’t forget to consider land tax
    Keep good records of all expenses for CGT
     
  14. SueA

    SueA Well-Known Member

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    People I know do this, just book in your dates and agent works around that. They deduct percentage of time they spend there as you said.
     
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  15. SueA

    SueA Well-Known Member

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    Haha, we thought of sticking a few 40 ft storage containers on the block and hey presto tax deductible. Ended up getting it for 72 in April, go up there every 2nd weekend, van is there so turn up Friday , leave Sunday, I love it,nice and peaceful, blocks now all cleaned up, going to gut the shed and closed in double carport and concrete the floor. Had a good score on the weekend, a guy wanted a yard of bricks cleaned up. took 5 of us 4 hours but got enough new bricks for son to double brick under his hiset and us to brick in the carport of the shed. Lucky we can do all the work ourselves.
     
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  16. SueA

    SueA Well-Known Member

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    Not o.o , so no exemption. Stamps,legals etc were under 2k. Have no PPOR debt so ended up paying cash, as only 72k, not much extra land tax. Will keep receipts for everything we do up there.
     
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  17. Susan

    Susan Member

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    Thanks for updating - love to read the (interim) 'end' of the story.
     
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