ClickCease

Can I Live In My Investment Property?

 

Real estate investment is a dynamic field with the potential for both financial growth and lifestyle considerations. As an investor, you might find yourself pondering the idea of living in your investment property. While it's a tempting thought, there are crucial factors to consider before turning this idea into reality. In this article, we'll explore the idea of living in an investment property and what you need to keep in mind.


Understanding Investment Properties


Investment properties are typically acquired with the intention of generating rental income and capital appreciation. They are often chosen based on their potential for returns rather than suitability for personal living. However, life circumstances and financial goals can change, leading some investors to contemplate residing in their investment properties.


Key Considerations


Legal Implications

The laws surrounding living in an investment property vary depending on factors like location, zoning regulations and the terms of your mortgage or property management agreement. Some local laws might restrict the use of properties intended for investment as primary residences.

Tax Implications

Living in your investment property might affect the tax benefits you receive as an investor. For instance, if you've been claiming tax deductions on expenses related to the property, those deductions might change if you make it your primary residence. Consulting a tax professional is crucial to understand the potential tax consequences.

Financing And Mortgage

If you initially acquired the property with an investment loan, converting it into your primary residence could affect your mortgage terms. Some lenders have conditions that require the property to remain an investment for a certain period. Informing your lender about your intent is essential to avoid breaching any loan agreements.

Capital Gains Tax (CGT)

If you decide to sell the property after living in it, you might be subject to capital gains tax. Generally, if you live in the property as your primary residence, you could be eligible for CGT exemptions. However, eligibility criteria and rules can vary.

Rental Income Impact

If you've been generating rental income from the property, transitioning it into your primary residence will cease that income stream. You should definitely consider how this change might affect your overall financial situation.

 

Can I Live In My Investment Property Image 1


Steps To Take To Live In An Investment Property


Legal And Regulatory Checks

Ensure that local regulations and zoning laws permit the property to be used as a primary residence. Check with local authorities and review any homeowners' association rules.

Financing And Mortgage Review

Contact your lender to discuss your plans. They can provide insights into how converting the property might affect your mortgage terms and interest rates.

Tax Assessment

Consult a tax professional to understand the potential tax implications of making the property your primary residence. They can guide you on factors like deductions, exemptions and capital gains tax.

Property Management Consideration

If you were using a property management company to handle the rental aspect, you'll need to make a decision about whether to continue with their services or manage the property yourself.

Insurance Review

Your insurance needs might change if the property shifts from an investment to a primary residence. Review your insurance coverage to ensure it aligns with your new status.


Long-Term Vs. Short-Term


It's important to differentiate between living in your investment property for a short period versus making it your permanent residence.

Short-Term

If you're considering living in the property temporarily due to a specific life event, like a job relocation or renovations to your primary residence, you might not encounter significant legal or tax complications. However, ensure you adhere to any relevant laws and regulations.

Long-Term

If you plan to make the property your permanent residence, be prepared for potential legal, tax and financial adjustments. This might include updating your address, transferring utilities and changing your residency status with local authorities.

 

Can I Live In My Investment Property Image 2

 

Living in your investment property is a decision that requires thorough research, careful planning and professional advice. While it can be a convenient arrangement in some cases, there are substantial legal and tax considerations.

Always consult with legal and financial professionals before making any major decisions that could impact your investment strategy, tax obligations and finances. When deciding, ensure you find the right balance that suits both your personal lifestyle preferences and investment goals. 

 

Buying off the plan property can be a daunting process, but there’s an easier way. iBuyNew is your all in one solution that supports you at every stage, from search to settlement. 

We take the pressure off you by doing the research, shortlisting the best properties that suit your needs, connect you to excellent brokers and conveyancers and keep you updated throughout the construction process, all the way until you get your keys. Book a FREE discovery call today or call 1300 123 463.

Published on 25th of August 2023 by Davina Deluao
Davina Deluao
Davina Deluao

Davina graduated from Swinburne University in 2018 with a Bachelor of Arts, majoring in Journalism. Through travelling and studying abroad in NYC and LA, her interests in property and design grew and became a strong pursuit. Davina has been writing for iBuildNew Group since 2019.

DID YOU LIKE THIS ARTICLE?

Sign up to the iBuyNew newsletter to receive more article and property news straight to your inbox

Your privacy is important to us. To better serve you, the information you enter in this form is recorded in real-time.
Off the plan

Want access to exclusive opportunities in off-the-plan property?

Sign up to our Free VIP membership for a personalised service.

Learn more