Sorry – I’m sure this has been asked a million times, but I cant find it here or on ATO site.
If you rent out your house first, then live in it – is it the same as if you live in a house first, then rent it out – (for future capital gains tax purposes when you sell) ??
We have a unit (duplex) sitting here that we don’t know what to do with, and need the answer pretty quickly. We have been told that if you rent it out first, then live in it – you can’t claim it as your PPOR, and can’t get CGT exemptions.
What’s right ?
Hi Inna,
Recommend you read chapter 6 of the attached link.
http://www.ato.gov.au/individuals/content.asp?doc=/content/31570.htm
Derek
[email protected]Read my comments? Think I can help you? PM or email welcome.
I’ve read the famous chapter 6 already, Derek. It doesn’t come right out and state anything, but gives a nice example of Frank the investor.
I just wanted to be 100% sure before proceeding.
I guess I can deduce from that, that the two things are the same – even if it doesn’t actually STATE it anywhere – just infers it.
Can I ask, are you the same Derek of another investment discussion site ? If you are, you’ll understand my desire for “due diligence”.
Thanks ![smiling]
Hi Inna,
Not an accountant so I stand to be corrected.
As I understand it – if you move into your property this will then become your PPOR and as such you will be eligible to have part CGT exemption status for this property provided you do not have another PPOR hidden somewhere.
A quote from the ATO website
“Not main residence until you move in
Therese bought a house and rented it out immediately. Later she stopped renting it out and moved in.
Therese cannot choose to treat the house as her main residence during the period she was absent under the continuing main residence rule because the house was not her main residence before she rented it out. She will only be entitled to a part exemption if she sells the dwelling.”
Under these circumstances I believe you will be liable for CGT apportioned on period of ownership basis. Ie half PPOR half IP then CGT will be calculated on half the gain and then 50% rules etc will come into being.
But as I said at the outset – I am not an accountant.
PS – I do get around a little [biggrin]
Derek
[email protected]Read my comments? Think I can help you? PM or email welcome.
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