What Happens When You Are No Longer a Owner Occupier?

LBacana on 24/08/2018 - 16:54
Last edited 24/08/2018 - 19:25 by 1 other user

Hi everyone,

I bought my house 9 month ago as investment property. I was living in the house for 6 months. The guys in my bank told me that even as investment, I could live in the house for 6 months to avoid to pay stamp duty. He said that is legal once in a period of 12 month at least 6 month I rent.

Also he suggested me to change for a home loan after 2 month and I did. I changed for home loan. I signed a contract for 2 years with fixed interest.

After 6 month I rented the house as organised. I just found out that as a home loan I could not rent the house. I went to my bank and I said to the guy in the bank and the guy told me that if I change now for investment loan the bank could be suspicious. He suggested me to stay quiet.

In the end of this month I want to do my tax and I don't know what to do now or what to say. Do I say that I rented the house 3 month a go or stay quiet? Some suggestions? I rented the house through a real estate agent.

Thanks

Financial

Comments

  • pyramid on 24/08/2018 - 16:55
    +9

    What Happens When You Are No Longer a Owner Occupier

    You either become homeless or start renting.

  • sprucemoose92 on 24/08/2018 - 17:00
    +1

    Any income that is in electronic form the ATO can and mostly likely will find out about, especially renting a house through a Real Estate Company. Also you are best to get these sorts of 'deals' in writing as the guy you spoke to will likely deny having given you the advice to cover himself and his employment.

    But it was slightly difficult for me to read the paragraph so hopefully I have pieced it together correctly.

    Best of luck.

    • Bacana on 24/08/2018 - 17:09

      I am in a home loan now with a contract (2 years fixed interest). I didn't know that I had to change for investment loan before rent.

      Will I have problem with ATO if I tell that the property has been rented out for the last 3 month as a home loan and not as investment loan?

      Or

      Or the loan status has only to do with the bank?

      • cloudy on 24/08/2018 - 20:14
        +1

        I doubt the ATO will care the loan status being either owner occupied or investment, that’s a banks thing I suspect.

        • jonnochen on 25/08/2018 - 08:47
          +1

          ATO shouldn't give a shit, as long as you are honest about your income.

          It is the bank that the issue is with. Banks care about their "risk"/making excuses to aid in making money off you. Separate issues.

      • CheapSticks on 24/08/2018 - 21:47

        How the bank classify the loan investment vs home has got nothing to do with ATO.

        If you have received income on the property, it is an investment property.

        Bit difficult to understand your english, hopefully thats what u were asking.

  • djkelly69 on 24/08/2018 - 17:05
    +1

    For your tax, it needs to be 100% correct/truthful. No option here.

    For the bank - if the person at the bank told you not to do anything, I probably wouldn't do anything. But this is dangerous as you will likely be in default of your loan contract if they found out you are using an owner-occupier loan for an investment property. Any chance you have advice from the banker in question in writing? Is he/she actually a banker, or just a broker?

    Frankly your banker/broker sounds dodgy, and I would be looking to take my business elsewhere.

    • Bacana on 24/08/2018 - 17:13

      Was in the bank. Was the briker in the bank who suggested me all that. I am a very honest person and I tried to do everything right and now I don't know what to do.

      If ai break the contract I will pay a fine and also they will question the 3 month I rented the house as a home loan.
      If I tell taxation office that I rented as a home loan will I get in trouble? Or the deal only has to do with the bank?

      • djkelly69 on 24/08/2018 - 17:17
        +6

        The tax office does not care what type of loan you have. Just make sure you advise them correctly about your income, deductions, etc.

        The loan issue is only to do with the bank.

    • Bacana on 24/08/2018 - 17:18

      Was the bank who suggested me all that. Was the same guy in the bank eho did all the paperwork for my approval

    • HighAndDry on 24/08/2018 - 17:32

      But this is dangerous as you will likely be in default of your loan contract if they found out you are using an owner-occupier loan for an investment property.

      Unless OP went to a loan shark looking to foreclose on OP's property for profit, the risk of this is zero for all practical intents and purposes.

  • Woodinski on 24/08/2018 - 17:16
    +2

    If it is your primary residence and you then rent out your house, you do not necessarily need to change to an investment loan. Your broker is right about staying quiet, why tell the bank that you are now using it for investment purposes just so you can pay a higher interest rate. As long as your home insurance reflects the change in use (i.e. you are renting it out) that is the main aspect.

    For tax purposes it doesn't matter whether it is a owner occupied or investment loan, same rules apply.

    • Bacana on 24/08/2018 - 17:20

      This is what I wanted to know. Thank you so much

  • HighAndDry on 24/08/2018 - 17:21

    I just found out that as a home loan I could not rent the house.

    Lol what? There's no such thing.

    • coxjon on 24/08/2018 - 20:04

      Our bank has no rentals unless the LVR is less than 80%.

      Apparently it’s to protect tenants who may lose their house if the owner can not pay their mortgage.

      • HighAndDry on 27/08/2018 - 10:24

        Which bank? And I know that a lot of banks have that in their loan documents, but it's 100% never enforced. Literally have never come across a single case of this being enforced, ever.

        • coxjon on 27/08/2018 - 10:29

          Bank West

        • HighAndDry on 27/08/2018 - 10:33

          @coxjon: Oh, okay obviously don't take this as gospel, but you have nothing to worry about. Smaller credit unions and the like might be harsher (because they have thin enough margins as it is), but Bankwest (owned by CBA)? High enough margins to have factored in people renting out 'owner-occupier' loan properties into their models (if it even makes a difference - usually not, rental income is additional income that makes it easier to service loans, and investment properties are more PR-friendly to foreclose on than someone's home), plus the recent Royal Commission means the CBA won't risk such a potential PR-nightmare even if they'd enforce otherwise.

  • Peter Enis on 24/08/2018 - 17:42

    I have a rental that is still on an owner occupier loan, no problem. The ATO won't care, they won't even know. Just be sure to declare your income.

    • hogwarts on 24/08/2018 - 18:32

      They will now.

  • Diji1 on 24/08/2018 - 17:43
    +1

    How about you stop listening to the bank's advice on what to do with your money? They exist to transfer your money to themselves.

  • HeWhoKnows on 25/08/2018 - 08:08
    -1

    What a poor sole
    So confused
    What has the bank got to do with your tax return?

    The type of loan is irelevent other than for determining the interest rate you pay.
    Suggest you keep quiet from the banks point of view as the guy said and leave everything as it is.

    Now go talk to your accountant

    • jackspratt on 25/08/2018 - 15:17

      What a poor sole…..

      He should also hurry up and get new shoes before his tax bill arrives.

  • SnoozeAndLose on 25/08/2018 - 09:34

    Which Bank is this?

    I know ANZ let customer go home load even they already have a home load with them, no need to be investment load.

    ATO wont care as long as you declare the right amount of interest being charged and amount of income it generated.

  • Bacana on 25/08/2018 - 14:49

    I would like to say thanks for everyone. I was so confused without know what to do. Now all make sense.

  • Magic Mirror on 25/08/2018 - 17:40

    Have you been following the news about the Royal Commission into the banking industry? The inquiry has uncovered a lot of dodgy behaviours by some banking staff, and it seems like the guy you have been dealing with is one of the dodgy ones.

    (But as others have said, as long as you declare your rental income and deductions correctly on your tax return, you won't get into trouble with the ATO.)

  • donkey12 on 28/08/2018 - 21:50

    Don't forget to record the days that you rented it as you would be subject to CGT on sale now that you've tainted your Main Residence! Doh.

    https://www.ato.gov.au/General/Capital-gains-tax/Your-home-a…

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