Hi,
A mate of mine just went and saw his accountant and apparently was told that if:
a) you don't currently own your own home and
b) you buy an investment property and
c) If you move into the investment property within 6 1/1 years of purchase thenyou don't have to pay capital gains tax on that property. Does anyone know if this is correct?
Hello jc1979
I think your friend misunderstood his accountant.
Alternatively, it could be a case of broken telephone. You know, it's that game where you sit around in a circle and someone whispers a sentence into the ear of the person next to them who then repeats it to the person next to them and so forth until you get to the person who originated the sentence. The fun part is hearing the original sentence and then hearing what it has become.
But to get to your question. To avoid paying CGT you need to
a) not currently own your own home
b) buy a property which you intend to have as an IP
c) move into it before you rent it out and establish it as you PPOR (home)Then you can move out and rent it for up to 6 years without having to pay CGT if you sell.
This will only work if you do not buy another property as your PPOR for that period.What is sweeter is that if you move back into the property within the 6 year period then move out and rent it, the six years starts again.
I'm not an accountant so your friend should go back to his for clarification, just to be on the safe side.
Hope this helps
ElkaYep Elka your right, you must live in the property and establish it as a primary place of residence first and its a matter of fact not just getting your mail and electricity and sundry all to that address, they even check the length of time and the amount of electricity you actually use and compare it to a similar PPOR of someone in a similar situation. Read a case on the very topic last weekend which went over the very things about PPOR and someone doing a dodgy.
Hello Jeff
Good that you've shared that as there have been people on the forum who have asked advice about "pretending" a place was their PPOR while they renovated it without actually living there. No flies on the ATO unfortunately.
Cheers
Elka
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