Possums

yeah sounds a bit mad doesnt it or does it??

wonder has anyone done this, rented your house out moved to another state/area and rented.. if so how do you go about getting references for new rental will the fact you own a property be enough or what. Just wanna go see new pastures an all but dont wanna burn bridges

Sherlock Holmes

I have no personal experience of this but it appears to be quite common around here amongst Aussie folk who move for work reasons but don't want to lose their link back to our little town. Most will do a 200k round trip commute but beyond that, they rent out here and rent near work.

So whilst this reply is of little practical help, it might help you to know that it is not a mad idea.

A.

Possums

Hi thanks lol well after rushing into buying our 1st property here we are not in a hurry to do the same again, so a kind of test it and see how it is on the big island is what we are aiming for.

jad n rich

You could move and rent in another state and as long as you dont buy another property, your home altough rented out can remain as your principal place of residence for tax purpose if you want, for up to 6 years.

Of course you still pay tax on the rental income.

Possums

oh you beauty thats really good to know, where do you find this kind of info? thanks

jimbo_d

Can work out really well for you especially if you have a borderline tax income. Say you earn on the threshold beteen tax bands, you move out and rent your house out, rent doesn't cover mortgage, negative gearing will make up for that and reduce your income, so you don't pay as much tax. A lot of people work the system like this, and you can rent out your PPR for up to 6 years like this too.

Steve2009

Google 'renter investors' in google.com.au and you may get some advice in this regard. Unless you're taking advantage of negative gearing you're going to be subsidising whoever is living in your property by quite a considerable margin. The rent will not cover your mortgage interest unless you have consderable equity. Even then your equity is subsidising your tenants.

ABCDiamond

Not mad at all, actually quite common.

It beats leaving a house empty, while you live somewhere else for a while, and may even be financially advantageous to you.

Definitely worth doing if you plan to move back again.

Possums

thanks guys I will look up 'renter investors' sometimes you just need the jargon, I tried a google but wasnt getting what I was looking for obviously wasnt wording it properly.

No mortgage so thats not a problem. still low price properties and rents where we are, so what we get wont cover what we will pay on the mainland but every little helps and better than it stood empty.

next question is the longest running one on BE, Where do we move to? Its scary like starting again but exciting at the same time

Steve2009

It looks like you will have to pay income tax on the rent you receive, those links around rental investors are probably more geared to those who are still mortgaged on their rented property.

Kelli28

It might be worth taking some of the equity out of your house to gain bigger tax advantages. I'm possibly going to be doing this with my house so I'm also interested.

Steve2009

This might be a cheap way to borrow cash, maybe to put on deposit to pay your rent. This would have income tax implications on the deposit interest though. Also, the ATO may not look too kindly on the equity release as an investment in the property.

Kelli28

Don't need the cash but someone told me if my rental income was smaller than the loan payments then tax benefits were higher.

ABCDiamond

Only for the interest payments on the balance of the original mortgage taken to buy the property. Not on any further redraw, or refinancing.

OzSheila

I thought you could draw down amounts up to the value of the original mortgage but not in excess and claim the interest thereon? Maybe I am getting confused with the case in the UK?