I intend on renting out the new one, but will move into for retirement, or mabye sooner. (I am 35 now.) I want to rent it out. How will this affect eventually making it my principal place of residence? Is there a certain amount of years you can only rent it out for?
You're worrying about something 32 years off – you will probably have bulldozed the house or sold well before then and the tax treatment would have changed half a dozen times inbetween as well. If you live in the house before you lease it out there is a six year exemption as long as you don't claim another house as your PPOR.
YOu can rent out your main residence for up to 6 years and still treat it as your main residence. You will need to live in the place before it can be your main residence, and you can generally only treat one house as your main residence at any one time/
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
May I ask: if I rent out the new IP& do not move into it first, does that mean I can never claim the new place as my PPoR ever again (given the current laws of course) even if I do move into it & genuinely make it my PPoR?
You can't claim a house as your main residence until you have lived in it. So if you later move in and then out again it could be your main residence from the date you moved in, but not before.
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 for the reply Terry. I was worried that I would have to pay land tax if I don't make the new one my PPoR. However, I've looked at the Land Value (NSW) search & they both add up to $287K so I am under the threshold & fingers crossed I will always be under the threshold as it climbs each year.
I am wondering if is worthwhile financially at all to make it my PPoR now buy living in it first or just rent it out? I don't intend to ever sell either of them, and intend on moving into the second one in retirement or mabye sooner.
Thank you muchly for your help.
Don't forget land tax is only on the land value too. I am not sure how the OSR treats absences from main residences for land tax purposes, but it will be different to the ATO.
I think it is a good idea to live in a place initially as you will have the option of claiming it as your main residence. Sometimes your intentions change, or you may suddenly need some money etc and have to sell so best to plan ahead just in case.
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
On second thoughts, I don't think I can do it as it is 3.5 hours from my workplace, and it is obvious that my intention is only for tax purposes. With the purchase, I purposely tried to avoid land tax as that is a real killer to investing in NSW.
What do you mean when you say the ATO treat land tax differently from the OSR?Land tax is a state duty, in NSW it is administerd by the Office of State Revenue. Income Tax is a commonweatlh levy and is administered by the ATO. Each will have it own rules which may mean definitions differ.
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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