Here are some numbers for reference: Fibro house on 550m2, owned jointly with wife in NSW Current loan on IP: 500k Demolition costs: 20k Site costs: 50k Build cost: 400k Total estimated costs: 470k Current funds available: 200k Therefore require additional 270k New loan will be 770k, with estimated end value of 1.2 mil = LVR of 64%
CGT would be worked out on a time basis Tax Tip 86: Don’t be so fearful of generating income from the main residence You will need the mortgagees consent to demolish a security property too.
1. No scrapping deduction available. 2. Date that property stops earning income ceases all deductions. 3. Some plant and equipment may be written off when it reached end of its effective life. Pooled assets ? 4. CGT on a time basis based on whole period 5. In future ownership costs for which no deduction has been claimed may reduce CGT profit applicable to the issue in 4. above. You need to retain records of this - Its a problem that wont go away. 6. Strategy to refinance at the end based on completed value should be discussed with broker This refinance may payout other loans.
