This video provides a tutorial on converting a property to a rental and purchasing a new property.
Transcript
In this video, we’re going to model a scenario where the clients purchase a new property in 2025 and turn their existing property into a rental property.
To do this, we’ll create a What-If scenario, since we’ll be making changes specific to this situation. I’ll go to What If and call this scenario Rental Property and New Property.
There’s already a property in the plan, which is their family home. In a future year, they’d like to change this home into a rental property and purchase a new primary residence. Now, in Voyant, there isn’t currently a way to “step change” a property type during the plan, so we’ll use a workaround by setting the property type from the beginning. This won’t affect the plan as long as the property isn’t sold before it becomes a rental, and I’ll show you how that works in a moment.
First, we need an event on the timeline for when this will happen. I’ll double-click on the timeline to add a new event: New Property Purchase Year. I’ll give it a house icon and make Mary the owner. Since the purchase happens in 2025, I’ll drag the event to that year.
Now, let’s set up the new property. From the Dashboard, I’ll click the plus button in the bottom-right and select Property. Here, I’ll enter the details for the new family home.
Because this is a new purchase, I’ll set it as a Primary Residence. I’ll enter the market value and select Is this a future purchase? → Yes. This creates an expense in the plan at the future purchase event, which we’ll confirm on the Timing screen.
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The Inflation Rate applies to the market value before the purchase.
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The Growth Rate applies to the property’s value after it has been purchased.
You can always use the inline help if you need a refresher on these fields.
Next, I’ll go to Timing and set the start event to the New Property Purchase. We’ll assume this property is held through the end of the plan. Done.
Now, if I double-click on the bar in 2025, I can see the expense: New Family Home Purchase. It’s using their savings to pay for the purchase, and under Properties, we now see the new family home added.
At this point, the original family home is still in the plan. Since we can’t change its type mid-plan, we’ll use the workaround: go to the property and change the type to Rental Property from the beginning.
Make sure to enter the purchase value for the rental property. That way, if it’s sold later in the plan, the correct capital gains tax (CGT) will be calculated. The CGT is based on the market value (grown at the property’s growth rate) minus the purchase value, so setting this correctly is important.
Click Done to save.
So, while the property isn’t technically a rental for the first five years of the plan, setting it as such from the start is a useful workaround. From 2025 onward, it functions as a rental property in the plan. And if it’s ever sold, either in this scenario or in another What-If, the appropriate CGT will be applied.