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  • Being a personal investor

    If you are not in the business of property renovation, or do not enter into a profit-making activity, are you a personal investor? The next example may help you in this decision.

    Example: Personal investor

    Doug is a sales representative. He obtains an investment loan and purchases a property that he intends to rent out. He would not consider selling the property unless the price appreciated markedly.

    The property requires renovation before it would attract desirable tenants. Doug renovates the property after work and on weekends. Over the period of the renovation, the real estate market booms and Doug decides to sell the property.

    Doug would not be considered to be in the business of property renovation. This is because his intention when he bought the property was to gain rental income rather than make a profit from buying, renovating and selling it: 

    • Doug didn’t rely on the income to meet regular expenses as he has income from his job.
    • Doug's renovation activities were not carried on in a business-like manner.

    Doug did not buy the property with a view to selling it at a profit, and did not carry out a one-off profit-making activity. Therefore, Doug is regarded as a personal investor.

    However, if Doug, because of his success with this renovation (either in his own right or with another or others) was to then undertake another renovation similar to the first with a view to achieving the same profit levels, he will be regarded as being in the business of property renovation. 

    End of example

    Note: If your circumstances are sufficiently complex and you cannot determine whether or not you are in a profit-making activity or in business, or whether you have undertaken a substantial renovation for goods and services tax (GST) purposes, you can write to the ATO and request a private ruling to determine how your income and expenses are treated for tax purposes.

      Last modified: 03 Aug 2017QC 18014