Rent out your fu­ture home

Herald Sun - Property - - DEVELOPMENT - BENN DOR­RING­TON

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.

Benn.dor­ring­ton@news.com.au

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