My sister is a first home buyer and wants to buy an existing IP from my mum. The IP is currently rented until Decemer this year. She also wants to get the FHOG before the Boost reduces in September. She just wants to move in for 6 months to satisfy the requirements of the grant then turn it into an IP for herself.
If she buys now she gets the full grant but will not be able to move in until December. My question is can she claim the 6 year CGT exemption as a PPOR.
She buys now. Rents to December for 6 months. Moves in for 6 months. Then rents out for 6 years.
Does she pay CGT for the 6 months out of the total 7 years. Or does she pay CGT for 6.5 years.The 6 year rule only applies to absences from your main residence. It is my understanding that you cannot claim a place as your main residence until you have liked in it.
So, i think she cannot claim it as a main residence from purchase until Dec when she moves in. GCT will apply to any gain during this period, but she may be able to claim some costs to offset this and also claim rental income expenses such as interest etc.
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
Terry's right, you have to live in it first. It's an absence from your main residence, and doesn't apply if you are claiming the main residence exemption for another property.
In your example she would pay CGT on the gain for 6.5 years.
I can understand the first six month is not claimable as she has never lived it to become her PPOR.
From December she will move in and will become her main PPOR for six months until June 2010. Shen then rents out as an IP.
As she has lived in it and became her main PPOR she should be able to claim the 6 year CGT exemption from June 2010 as it is an absence from her main residence.
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