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Value added by home and income?

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  • Value added by home and income?

    We are looking to purchase a home which has a legal home and income setup. The flat has one bedroom, is separate from the house and has its own access to the road so living in the main house you'd have great privacy.

    The flat is tenanted at $350 a week which in my thinking is the equivalent of a 3.5% gross yield on an investment property worth $500,000. My thinking is that we could therefore expect to pay up to $500k more for this property compared to the same property without it. Is this a fair assumption or am I attaching too much value to the home and income?

  • #2
    Is the flat consented? Does it have its own title? Or is it something that could be done?

    cheers

    Donna
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    • #3
      Hi Donna,

      The flat is consented as a separate dwelling unit but doesn't have its own title. It is situated above the double garage which is not attached to the house so not sure if it could be made to be on its own title. The property is zoned Single House Zone under the Auckland Unitary Plan.

      Chris

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      • #4
        Somewhat less I would think. You need to account for interest tax and other costs. It might have cost say 150K but can pay more than this off your mortgage.

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        • #5
          How is that going to work under the new laws? If it’s rented how is the capital gains tax going to be calculated?

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