Ho Everyone
If I was to buy a property to rennovate…..which I said I was going to live in after I had completed the rennovation (even if I don't plan to), and then "changed my mind"….and decided to sell it instead or even rent it out until I was "ready to move in"…….what is my legal position?
I would obviously save myself on stamp duty if I did this, but is it allowed? If I make a profit (which I would obviously hope to!!!) would I have to pay capital gains because I had not actually lived there? How could they prove I did not live there if I had bills etc coming to the property in my name?
I know this all sounds a but dodgy, but that's why I thought I would check out what's allowed and what's not!!!
Any advice?
Thanks
Rudi
I guess it all boils down to your intentions at the time of purchase, although I would speak to an accountant. Because although this sounds like a great idea to save you some stamp duty, if the ATO doesn't believe you and if they ever audit you, you could fork out more than what you may have saved via CGT concessions and stamp duty premiums.
I had friends who "decided" they would claim the FHOG for one of them, even though the other had already owned a house that they lived in. They rented the property out to a family member to avoid a rental trail and even got some of his mail sent to the new property – it took about 6 months for the powers to be to work out what had happened and they not only had to pay back the FHOG but had other expenses incurred which far outweighed the $7000 originally paid to them.
So the moral to the story is: can you justify it honestly to the ATO, and is it worth the headache/ potential costs if they ever disagree with your "intentions" for the propertyYou must be in QLD as that is the only state (i think) where the stamp duty varies depending on the purpose.
How bad is the property, could you 'live' in it while renovating. Do you have another proeprty which you will be claiming as the main residence at the same time? Maybe have a look at the OSR website in QLD and see what they say about defining intention and investment.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi Terry
Yes, we are in Qld. The property would be ok to live in it's just tiny though and would be very difficult to live in with the kids. I think it really depends on how long we have to live there. We could rent it out for a while, then move in for a short time whilst we rennovate, or just move in to satisfy the legal requirement to do so – we have to move in within a year of the purchase according to what I have read. I think probably I should find mysefl a decent accountant and take some advice.
Does anyone have a suggestion for a good property accountant in the Redlandshire district in Queensland?
Thnaks
Rudi
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