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PPOR to IP question

Discussion in 'General Property Chat' started by Realist35, 13th Jun, 2016.

  1. Realist35

    Realist35 Well-Known Member

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    Hi all,

    My partner and I are thinking of buying a property in Perth early next year. We don't live together at the moment - i live regionally where i have housing provided by my company whereas my partner will be living in perth with her parents over the next 2 years until she finishes her studies.

    The property would serve as an IP and one day we would convert it to PPOR when we decide to move to Perth. However as my partner has to be in perth over the next couple of years, are there any benefits of her living in it first for a certain period of time before we start renting it out (such as exemption to CGT, first home owner grant etc.)?

    Many thanks!
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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  3. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    I wouldn't have your partner live in it for the full 2 years though - live in it as short as possible (6 mths for FHOG), then rent it out for the rest while your partner lives at home. You'll save more this way and be able to save into your offset so you have minimal interest to pay once you move in.

    You'll get the FHOG if the house is brand new, and a stamp duty exemption as well if the house is under $430k. Over $530k you'll pay full duty, so it can be worth looking at buying land and building as SD is only payable on land value then.
     
  4. hash_investor

    hash_investor Well-Known Member

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    That is a very good strategy. However I will count all the new connection costs for a new build as well. They may still be less than 50% stamp duty but still...
     
  5. Realist35

    Realist35 Well-Known Member

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    Thanks very much Jess.

    I'm kinda confused now as to what's a better idea for us. If we build it's likely gonna take a while and we'll miss on rental income. Also our budget is around 500k which means we would have to go a little bit further out. Originally our idea was to buy a townhouse in a decent location (5-10km from CBD).

    Maybe we just get a new townhouse?

    Do we both have to live in it for the first 6 months to get the FHOG or just one of us living there would be fine?

    Cheers!
     
  6. Realist35

    Realist35 Well-Known Member

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  7. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    Just one is fine. A new build will qualify for the $10k grant as long as its brand new, but the duty concession won't be as good.
     
  8. Realist35

    Realist35 Well-Known Member

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    Thanks guys. I guess the benefits of living in it for the first 6 months and getting FHOG wouldn't be significant. We could earn roughly 10k by renting the property out in those 6 months we would otherwise have to live in it.

    The benefits of building the first home and not paying SD on the house would be handy i guess but the trade off is that we would need to go further out from the CBD and all the hassle of building (especially for someone with zero experience in building and plus not living in perth).