Rent out your future home
RENT it out, then move in later. It’s a new strategy for some suburban empty-nesters buying off-the-plan apartments years before they plan to move to the city.
One real estate agent said almost a third of his investor buyers were “future downsizers”. Frank Knight agent Daniel Cashen said homeowners were buying new apartments to rent out for up to five years and claiming tax benefits such as negative gearing and capital gains savings, then moving into the apartment when they were ready to downsize.
“At the moment I would say it’s 30 per cent of investors that we deal with fall into that category,” Mr Cashen said.
He said empty-nester investors had already bought almost a dozen apartments at the Hawke & King project in West Melbourne.
Developer Paul Bell, of the Brunswick Group, said they were trying to appeal to the empty-nester market by finding prime locations and creating a sense of community.
Mr Bell said they were offering larger-than-normal apartments, house-like finishes such as 2.9m-high ceilings and open spaces including rooftop terraces and wide walkways fitted with seating.
But property valuer and WBP Property Group executive chairman Greville Pabst said it was an uncommon strategy that might not be worth the trouble. He urged buyers to get independent tax and property advice.
He said owners could only rent out their property for up to six years without attracting capital gains tax — if the period was exceeded it wouldn’t qualify for its tax-free status.
“Savings achieved through negative gearing may not be offset by the cost of a renovation to improve a property for owner occupation after being leased for six years,” he said.