Hi All
Am looking to buy a holiday home that I’d use only during weekends and term holidays. I am planning to let it on Airbnb on days when am not gonna use it.
Should I classify this as investment property or owner occupied for the purpose of mortgage and stamp duty calculation?
What is the right thing to do?
Interest rates are generally lower for owner occupied - this would be my primary concern.
If there is a federal election, do you cast your vote at where this property is?
If you live elsewhere, then it isn't owner occupied is it. You can only have one PPOR.
as above, you can't 'classify' it as PPOR unless you have lived in it and have evidence of same (utility, address change etc) for usually at least 3 to 6 months. if you have, you can nominate it as PPOR for up to 6 years if you move out. in this way you could lease it out as airbnb whilst keeping its PPOR status for capital gain purposes at the same time, but you can only have one PPOR at any certain time, and this is only something you need to decide on when you sell, so your only decision is whether you move into it now to keep your options open or lease it from get go. it comes down to expectation of capital gain and whether you have another property in your name.
stamp duty isn't relevant to the above unless you are a first home buyer eligible for stamp duty concession within a certain price bracket depending on the state, in which case you need to move into it as an OO property to be eligible.
for mortgage you can always say it's for OO to access cheaper rate and rent it out later. banks don't care, but it can affect your borrowing capacity.
. banks don't care
I think you'll find that they do care. If you deceive them and they provide you the wrong type of loan that is ultimately reported to regulatory bodies, don't expect friendly service when they find out.
no banks actually don't care. the rate difference is due to APRA requirements on lending - they are required to have certain % of loans as OO vs investment - you'll find they have similar profit margins for either loan.
for example if you take up a loan with intention of moving in and later on lease it out no one will enforce a change to investment loan. they definitely don't give 2c what type of loan you have only whether you stay with them or another bank. friendliness is irrelevant. what regulatory body do you think looks after this?
they definitely don't give 2c what type of loan you have
So you are suggesting to OP to take out a OO loan because it is cheaper then just tell the bank a few years in the future to switch it to an investment loan and by the way, I never lived there?
@serpserpserp: if you apply for the loan with the intention of moving in that's all you need to tell the bank. now whether the OP has legitimate intentions, no one will know and cannot be policed, as you can always say your circumstances changed. if you have an active air BNB / lease on the property you cannot APPLY for a new loan as OO - but once the loan is written (eg. fixed for 4years) you will not be made to switch the loan to investment.
it's a very common practice, banks won't find out and won't care as long as you don't have 2 owner occupied loans with the same bank.
stamp duty isn't relevant to the above unless you are a first home buyer eligible for stamp duty concession
Is relevant for QLD and VIC. They have different rates for investment or PPOR.
you’re right. am in QLD. the rates differ between owner occupied and investment property
We bank with ANZ and have our holiday home classed as owner occupied (in terms of interest rates), it's not an investment property.
They agreed to do the lower interest rate as the area the house is in is definitely a 'holiday' town.
It can be done, you just need to speak to your broker/bank.
Thanks! I’m looking to buy an apartment which is definitely in a holiday town and am only under 3 hours drive from my current house. My main intention is to use the place as our weekend house and the thought of letting it on airbnb is only secondary.
Some things to think about:
You'll probably be wanting to stay at your holiday house at the same times that renters will also want to.
You're going to have to declare your rental income to the ATO, but that also allows you to claim some portion of your expenses on your tax as well. You probably should talk to an accountant.
Some councils, particularly in "holiday" areas, have bylaws about short term rentals, so you should investigate that.
You're also going to need to clean and maintain your holiday house between (short term) airbnb tenants. Three hours away (and three hours back) makes it seem unlikely you'll be able to do that yourself all the time (if at all), so you may need to engage local management and cleaning services. Some renters can be great, but others can be like a wrecking and demolition team. You're going to need to check the place out after each and every rental. At a short term rental house across the road from our holiday house (which we don't rent out), a group of renters once put most of the lounge room furniture on the roof of the house!
Also don't forget to factor in CGT if you ever need to sell the property.
As others have said, simply describe what you are doing to the bank … i.e. that your intent is to use it as a "holiday home" … and go from there. They will likely classify it is as owner occupied.
What you do after that with respect to your letting it out, income, and tax, etc. is an entirely separate matter for you to take up with your accountant.
If you borrow as OO then you can't borrow as much as there is no income to support repayments (therefore watch out). Everything else is covered above.
Whilst still in it's infancy, and not very well known, consider also listing on Houfy https://www.houfy.com/
There are no fees for guests or hosts at present. It allows direct communication between hosts and guests and cuts out lots of the BS from other OTA's.
Talk to an accountant