A couple of weeks ago I posted a question about my IP in queensland that my in laws are living in. They pay us minimal rent and a couple of people posted concerns about what the tax man would think.
When we complete our tax returns we offest any costs with rent at the current market rate not the rent they actually pay us. Also we bought this property and lived in it for over a year to get the FHOG. My husband was then posted to Melbourne with work so we moved out and his parents moved in. I have 2 questions which I would appreciate some advice on –
1) Our accountant advised us it is ok what we are doing with the rent situation but I am now worried he has advised us incorrectly. Does anyone know how the tax laws treat this situation?
2) If we sell this property within 6 years of first buying it do we have to pay CGT on it, considering we lived in it before we rented it out?
Thanks very much in advance for any help!
Sarah Melbourne
When we complete our tax returns we offest any costs with rent at the current market rate not the rent they actually pay ushttp://www.ato.gov.au/content/downloads/NAT1729-04.pdf page 6
If we sell this property within 6 years of first buying it do we have to pay CGT on it, considering we lived in it before we rented it out?If you have not taken up another PPOR in the meantime, you could sell it CGT free
1) sound ok if you are claiming market rent.
2) Sounds like you should be able to claim the main residence exemption for CGT if you have not claimed another property as your main residence at the same time. Check this with your accountant,.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]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
Thanks guys.
Reading the ATO ruling it looks as though what we are doing is not right??
Also we have bought another house in Melbourne and we live in it, does this mean that we have claimed it as a PPOR and will have to pay CGT on the Qld property?
Sarah Melbourne
Sarah
I beleive you can still choose between the two. one or the other, not both, can be claim as your PPOR at the same time. It may be better to chose the one with the higher growth. Check with an account before you claim.,
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]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
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