allowable expenses on investment property

D

dedalus

Guest
I am currently living in my primary residence but am about to change the mortgage on this from a homeloan to an investment mortgage, as i will be moving into my fiance's house very soon.

As part of the re-mortgaging package i want to release some equity to completely re-decorate the bathroom etc. I want to ensure that the money i spend on this work is offset against my tax on the rental income when the tenants move in. Is there any timeframe or limits on this work in terms of being able to offset it? should i wait until the investment mortgage is in place and then carry out the work? - obviously this will be more disruptive for the tenants however.

any advice appreciated.
 
Anything [broken link removed]

How long have you been living in the property. If less than 5 years you will have to pay clawback of stamp duty



When you sell the property you will have to pay CGT
 
thanks for that
one more thing though. is the clawback calculated on a time basis, for example will the clawback be reduced by 60% if i have lived in the house for 3 years (therefore leaving only 2 years left of the total 5)
thanks
 
No - the SD clawback on owner occupier PPRs rented out within 5 years of purchase is an all or nothing charge and not calculated pro-rata as outlined above.
 
i dont suppose this clawback counts as an allowable expense to offset against renatl income tax?
 
Again no. Any expenses incurred prior to letting is not allowed. It is however allowed against CGT if and when you decide to sell.
 
dedalus said:
I want to ensure that the money i spend on this work is offset against my tax on the rental income when the tenants move in. Is there any timeframe or limits on this work in terms of being able to offset it?
Click to expand...

as far as i know, you can offset renovation cost done between rental periods but not if the work is done before the first tenant moved in.
 
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