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Renting out a Principal place of residence

Discussion in 'Accounting & Tax' started by Surfboy, 24th Aug, 2016.

  1. Surfboy

    Surfboy New Member

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    Sydney
    Hello,

    I woukd be very grateful of your opinion regarding the following.

    I have recently settled for a house that I intended to live in. I have a P&I mortgage and LMI insurance, the loan product I have was a first home loan with a lower interest rate being an owner occupied home.

    My work has suddenly changed and I am needing to rent the house out.

    Being an owner occupied P&I mortgage, am I able to rent the house out and treat it as an investment property for tax purposes, given that I no longer live there? Would the ATO have a problem with me renting out a house that was initially approved as, and is still, an owner occupied mortgage??

    I would appreciate your opinion.

    Many thanks.
     
  2. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    Its totally fine to rent out your PPOR regardless of a P&I or IO structure.

    You may want to consider going IO with a linked offset and have rent and salaries paid into it and mortgage payments come out of it.

    Which bank is it with?
     
  3. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    No issue with that.

    The tax man doesn't care how the loan was initially set-up (whether it was owner occ or investment).

    Cheers

    Jamie
     
  4. Scott No Mates

    Scott No Mates Well-Known Member

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    Provided of course that you declare the income.
     
  5. Surfboy

    Surfboy New Member

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    Many thanks Gents.
    What would be the advantage of making it interest only ?
     
  6. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Yes you can rent it out. Consider there may be stamp duty implicatuons in some states.

    Also consider the land tax and cgt effects
     
  7. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    Location:
    Perth
    1.Cashflow

    2. Preserve original loan amount for max deductions.

    3. Money tied up in bricks and mortar may not be easy to access or not at all pending individual circumstances. In offset its at your beck and call.

    4. Store principal amount in offset along with rent, savings and salary as a buffer with easy access. Need to have good money habits. Can also be used as deposit for another ppor or IP and has same nett effect as paying down principle but with benifits outlined above.