can I move into my I/P?

Hi Maximus,

I can offer a comment from my limited experience.

I assume you still have a mortgage over the IP? If so then the loan would cease to be an Investment loan and revert to the standard mortgage…ie interest rate change (maybe), no tax deductions, etc, etc.

If not, then all for the better.

If I’m telling you to suck eggs then I’m a bit of a [:0)]!! [][]

BTW Terry is a Guru! He kindly helped me out assesing my Borrowing Capacity. Thanks Terry!

Dram

Actually you only get a partial CGT exemption. You have to pay CGT on the time this property was rented out (sec 118-145). Here’s an example:

quote:

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You Acquire a property on 8/4/1992 and use it as your main residence until 17/8/1994. On 18/8/1994 you start renting the property out. On 29/11/2001 you sell the property. The partial exemption is as follows:
days in period 8/1/1992 to 17/8/1994 / days dwelling owned * capital gain

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Very hard to own an asset – earn taxable income from it – and not have to pay CGT.

Cheers

Stu

Property & Finance News
at http://www.prosolution.com.au

hi Stuart

I must disagree with you on this one.

Section 118.145 of the Income Tax Assessments Act 1997 (http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s118.145.html) allows you to be temporarily absent from your main residence for up to 6 years, and to still claim it as you main residence. You cannot have more than 1 main residence at the same time (except for a period of 6 months while you are in the process of moving – section 118.140).

This works well for people working overseas or for people who rent temporarily somewhere else.

So you can rent out your house and still claim a CGT exemption if you don’t have another main residence at the same time and the period is less than 6 years. The 6 years starts again if you move back intothe house.

Here is an actual example from the link above.
Example: You live in a house for 3 years. You are posted overseas for 5 years
and you rent it out during your absence. On your return you move back into it
for 2 years. You are then posted overseas again for 4 years (again renting it
out), at the end of which you sell the house.

You have not treated any other dwelling as your main residence during your absences.

You may choose to continue to treat the house as your main residence during both absences because each absence is less than 6 years.

You can make this choice when preparing your income tax return for the income year in which you sold the house.

Ps Confirm this with your accountant.

Terryw
[email protected]

Hey Maximus,

I bought a property many years ago in VIC.
I lived there with two house mates — and negative geared the two thirds of the property that I was renting out. Because of this situation I had a standard loan not a investment loan. But I could claim all the deductions associated with negative gearing. As I was paying a lot in tax at the time — the situation worked well for me.

When I sold the house 3 years later I made a small loss on the deal overall (due to large reno’s and capital works $$). This loss was written off against my tax the next year by my accountant. I never really understood how it all worked — but I didn’t have to pay CGT so I was happy at the time and left it at that.

Goodluck.
tj []