We bought our PPOR in 2004, lived in it for a year, then rented it out and moved interstate.
In 2006, we bought a new PPOR interstate, and continued to rent out the IP til 2009 before selling it.
So…. should we treat the new house as our PPOR from the day we bought it, or nominate the first house as PPOR until the day it was sold?
The greatest capital gain over this period would easily be on the first house.
Is this likely to be a red flag come tax return time when the ATO data match, see a sale but no CGT declared while owning another home?
When this was typed in it was as stated below as it could change with tax reforms by Henry Report
There is a six year rule for claiming the first PPOR as your PPOR capital gains exemption.
However the second property would not be able to be claimed as ppor at the same time.http://www.ato.gov.au/individuals/content.asp?doc=/content/36887.htm
look for
Home used to produce income for more than one period totalling six years
in web link above
If you can prove that you lived in the first place with records you can nominate it as being main residence while renting it out !Hope this helps, you will need to ask accountant or ATO how to nominate it as main residence for up to six years.
b0son wrote:We bought our PPOR in 2004, lived in it for a year, then rented it out and moved interstate.In 2006, we bought a new PPOR interstate, and continued to rent out the IP til 2009 before selling it.
So…. should we treat the new house as our PPOR from the day we bought it, or nominate the first house as PPOR until the day it was sold?
The greatest capital gain over this period would easily be on the first house.
Is this likely to be a red flag come tax return time when the ATO data match, see a sale but no CGT declared while owning another home?
?You should be able to nominate the first house as the main residence. But you will then be liable to pay CGT on the 2nd which was sold. So you need to weigh up if it is better to pay now be be exempt later or vice versa. Factor in the opportunity cost of the money you will use to pay the CGT now. eg. if you claimed the second house as the main residence you can then invest the money which you would otherwise have used to pay the CGT. This may help you may more in the long run than the tax. Also need to consider your incomes now v future projected incomes and changes to the tax system in the future could mean even more tax may be payable.
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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