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Subscribe On AndroidTrevor is seeking a “Tree Change”: To escape out of the city with his family. What are the implications of turning his Principal Place of Residence (PPOR) into an investment property to do so?
Meanwhile, Emma’s got a duplex under a single title. She lives in one unit and has rented the other; is she eligible for Capital Gains Tax exemption?
Clinton wants to know what the best loan to attach his offset account to is: an interest-only or principal-and-interest loan.
Folks, today’s massive Q&A highlights the most significant benefit of Australia’s tax system, the importance of seeking good tax advice (and the implications if not!) and exactly why record-keeping could save you thousands.
Tune in now! 😊
Free Stuff Mentioned
- How much is your property earning (or costing) you? Moorr’s newest Property Cashflow Projection Tool is now live! Get a detailed breakdown of money going in and out over the next 12 months, plus the full tax story.
- Resources from Ben’s “What’s Making Property News”:
- Leave us a Q for our next Q&A Day! Reach out to Bryce on Instagram or through our SpeakPipe. (And get a free Start & Build course if your Q is featured!) Psst – also feel free to send us your life hacks, property news, and more!
- Looking to run different scenarios for your future? Book your free initial consultation with our team of Qualified Property Investment Advisors today.
- Guests & Episodes Mentioned:
- 399 | “I Just Wanted to Keep the Party Going!”: From Overcoming Addiction to a 4 Investment Property Plan – Chat with Alex
- 502 | “It’s Putting the Mouse in Charge of the Cheese!”: Death, Taxes & Inheritance – Chat with Julia Hartman
- 503 | How to Get the Right Property Investment Advice – Chat with Joel Burton
Questions We Answer…
Q1) Capital Gains Inquiry from Emma
Hello, my partner and I bought a full duplex with a single title in 2022 for $465K.
This year in February 14th, we sold it for $550k. The unit 1 was rented when we first purchased the property and is still currently rented by the same tenant. She stayed there even after the settlement whilst we moved into the unit 2.
Can you please help me with the capital gain tax calculations and whether we would be eligible for an exemption. I can’t seem to find a straight answer online, whether we would take the capital gains tax on just unit 1 or whether we could apply for the exemption for the whole property.
Thank you. I appreciate your help.
Q2) Where to attach my offset account? from Clinton
Hi Bryce and Ben and the team on The Property Couch. I just have a question in regard to which loan I should have my offset account attached to?
So, we currently have our PPR in Cairns, which is of the value of approximately $600k which in the next three years we’re going to rent out. Hence, it’s an interest only loan.
And we are also going to buy a property in Melbourne this year of a value approximately $800k but that will be with P&I loan. Just wondering which loan would be better to have the offset attached to as $800k purchase will be P&I and the $600K PPR right now will be interest only.
Obviously, interest only helps with cash flow as well. I understand that it’s probably better to have the offset on the higher mortgage, but would it be better to have it with the lower mortgage considering it has the interest only loan? Thanks guys.
Q3) How to turn your PPOR into an investment property and move to the country? from Trevor
Hey guys.
Love what you do, the podcast and the content you share. My wife and I are on our journey with Empower Wealth, and we’ve just loved every minute of it. We’re keen to keep kicking goals on this journey we’re indebted to you guys for.
My question centres around a sea change for us and our family – albeit moving to the country, not the sea or the ocean – would love to, you know, buy that acreage on a hill somewhere and just want to understand I guess in general terms, how that would look or play out for our current situation, being that we have a PPOR in the city here in Brisbane, we’re sitting at about 25% LVR on that.
We’ve just executed on our first investment property and the total LVR would be about 46% and with the available equity 80% of the PPOR of about $750,000. I guess I want to understand how you can or could you turn the PPOR into an investment property, move to countryside and buy another PPOR and convert that one into an investment?
How that sort of plays out in the finance and its tax implications, recognising that you know with the LVR so low on our current PPOR, it would be I guess positively geared considering that rental appraisals are around about $1200 per week in today’s market?
So I’m struggling to understand how we could do that and I guess live our best life where we are keen to live. But yeah, look forward to hearing what you guys think and yeah keep up the great work.
Cheers.
Timestamps
- 0:00 – Everything You Should Know Before Turning Your PPOR Into an Investment
- 1:17 – Welcome back Bryce!
- 4:13 – How to calculate how much your property is earning or costing you
- 8:41 – Mindset Minute: “The Gap between the Life you want and the Life you are living is called….”
- 10:50 – Q1) Are we eligible for a Capital Gains Tax exemption? from Emma
- 12:10 – The greatest gift of the Australian tax system
- 16:11 – Why talk to a tax advisor?
- 17:54 – A $21,250 tax bill & setting the precedence in 2023
- 22:32 – Q2) Where to attach my offset account? from Clinton
- 23:47 – The best place to park your offset is…
- 26:40 – Why does your highest cost of debt matter?
- 28:15 – Why record-keeping here matters!
- 28:51 – Don’t miss THIS tax advantage!
- 29:47 – Q3) How to turn your PPOR into an investment property and move to the country? from Trevor
- 32:35 – Will it become positively geared?
- 34:13 – Ben’s preference in these scenarios
- 35:27 – How modelling can make an impact
- 37:02 – Brisbane’s an interesting market because of…
- 38:25 – Tax implications & the team to help
- 40:40 – At minimum, it’ll cost you $40 to $50G…
And…
- 43:49 – Lifehack: Take a _____ overseas! (And don’t leave your card in the safe 😉)
- 54:14 – WMPN: Always read the terms and contracts & Westpac’s Prestige Property Report: Which investor gets the best tax concessions?
- 1:03:41– A letter from Alex from Episode 399!
