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Mixed purpose beach Pad and Tax

Discussion in 'Accounting & Tax' started by SouthBoy, 17th May, 2016.

  1. SouthBoy

    SouthBoy Well-Known Member

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    It's been a dream of mine for many years, to own a 2-bed property which is walking distance to a beach, and within a 2 hour commute of Sydney. I hope to spend no more than 225k on this property. Ideally this property should have low holding costs (No high rises). This is to allow me and my young family to spend a few weekends during the year close to a beach and to be away from our suburban home. During the time we are not there, I plan to give it to a local holiday rental company or Airbnb, so it can produce some income as well. I have heard many times over that holiday properties don't make great investments. But for me this is a lifestyle choice as well. Can someone please recommend me some spots close to Sydney where I can make this dream into a reality. Also when it comes to tax time, how do I apportion the investment percentage? Is that based on how many days in the year was used to produce income? I know this will vary every year.
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    It will be tricky. Will it genuinely be available for rent and at market values? If so it would be a matter of working out how many days it was and wasn't available and apportioning.
     
  3. bob shovel

    bob shovel Well-Known Member

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    Great dream! Is there anywhere you could move to have your cake and eat it to??

    I know nothing about the tax side but will suggest some areas close to syd. i like the south coast around callala bay, huskison, culburra beach etc but the market has been on the move. @BuyersAgent Matt might have some more info.

    You could also go north for a unit around the entrance or Noah head, budgewoi area.
     
  4. SouthBoy

    SouthBoy Well-Known Member

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    Guys, thanks for the response! I would definitely consider moving up the budget,if a suitable property comes up. Couple of months ago we went and stayed in a property in NSW south coast for a few days, the property was booked through Airbnb. As is the norm with Airbnb, the owner of the property welcomed us, showed us around the house, gave the keys and she said she'll be staying with her parents couple of streets away and to call her if faced with any issues. We realised while chatting with her, that the property we were staying in, was her usual place of residence. Besides Airbnb allows you to rent out part of your house ( 1 or 2 rooms). So in this case the property is for mixed purpose. Is this a complete "No No" as far as ATO is concerned?
     
  5. BuyersAgent

    BuyersAgent Well-Known Member Business Member

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    Its a nice dream. But combining the location limits (ie walk to beach less than 2 hrs Sydney) for 225k will only allow a leasehold cabin in a van park I fear. Suggest to save a little more or be prepared to drive a little further.
     
  6. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    $225k ?... 1br around $220-$250K in Central Coast regions. (The Entrance Caravan Park - perm van ?)
    Culburra, Callala etc moved towards a million long ago.
    Wisemans Ferry River etc maybe but you have to deal with roar of ski boats.

    Mixed purpose just means proportionate deductions. The ATO access AirBnb and look for those who arent perm renting and are wise to private use too. Claim 100% and they would just deny all deductions and let you fight them. There are tell tale signs of owner occupancy they look for...eg electricity use.

    Expect long periods of poor tenancy. Holiday rental can be tough on cashflow. The $3K a week in peak isnt what happens 52 weeks a year. Luck to get a few weeks of that then boom season over.
     
  7. SouthBoy

    SouthBoy Well-Known Member

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  8. Sonamic

    Sonamic Well-Known Member

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    Have you thought about buying a 30k caravan and just tow it to a beachside van park at your leisure?
     
  9. bob shovel

    bob shovel Well-Known Member

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    You can also hire them out for around 100/day pending your chariot. ... cash is king ;)
     
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  10. SouthBoy

    SouthBoy Well-Known Member

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    No, I didn't consider this option. But thanks for suggesting it. I am more comfortable holding an appreciating asset, which in time could serve the family as an investment/cash cow.
     
  11. bob shovel

    bob shovel Well-Known Member

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    I just looked at the first one. Wow the entrance had changed! Haven't been there since i was a kid and that unit block and surrounds wasnt there!

    Looks like a good suitable rental spot. If you're looking for something for the family then guests will be looking for the same thing