Transforming a Primary Residence into an Investment

Whether you are moving overseas or upgrading your current residence, converting your existing property into an investment may be a beneficial idea. As with all things property, it is important to consider the potential limitations, liabilities and expectations.


Changing Your Investment In Your Home

Intended Use

How you intend to use your vacant property will lead you to a number of decisions. If you decide on renting it out the first point will be to consider whether to privately oversee the property or hire an external agency for day-to-day management.

Rental requirements vary widely between states in Australia. Accordingly, getting to know your rights and those of the potential tenants is a must.

Whether you manage the property yourself or appoint an agent, getting sound legal advice is essential. Legal experts can help ensure your agreement with an agency is sound, and that both parties are aware of their respective requirements. Furthermore, your legal practitioner will help advice you of your obligations to the tenant, and theirs to you.



An initial step when converting a property into an investment is to examine your current insurance policies. Standard home and contents policies do not always transfer to rental properties so it is best to look over your current policy with a fine toothcomb to ensure you are adequately covered. Considering landlord insurance may prove beneficial if loss of income or damage to the property becomes an issue.

Rate prices can vary in some jurisdiction depending on the property’s use. Contact your local authority to determine any changes you can expect upon the conversion.



Speaking to a financial advisor or accountant regarding your taxation liability is an important step. Properties with net losses after all income and expenses are accounted for, known as negatively geared, may not affect your taxation liability; however, on the other end of the spectrum, positively-geared investments will most likely increase your liability.

Overall a good accountant is a beneficial ally in the world of investment property.



The expenses that can be claimed as a property-related deduction are long and varied, however it is imperative that you know what you are getting yourself into financially.

Some of the potential expenses that may be covered are:

  • Repairs
  • Rental advertising
  • Property insurance

There are limitations to what you can claim. It is important to remember that improvements to a property are not deductible. If you were hoping to add a new $20,000 bathroom, it may be time to rethink that option.

As with all things financial when it comes to an investment property, speak to your accountant before making any decisions.


Capital Gains Tax [CGT] is a primary consideration for many potential investors wishing to convert their home into an investment property. The amount of CGT you will be obligated to pay will vary based on:

  • Price you paid for the property
  • Number of years you have owned the property
  • Length of time the property was rented before selling
  • Amount the property sells for

To get a good idea of your own liability, contact your accountant and discuss CGT in detail.

If you decide to sell your property whilst it’s still tenanted, you will need to ensure you meet your obligations to your tenants. The state the property is in will determine the correct procedure for going down this path.

By Samantha Vlcek. 

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