Thank you all.
Did u live in A? If so you could probably claim this as your main residence. You could also claim B too, but not both for the same period. either one if sold within 6 years after moving out could be exempt from CGT.
I beleive that if you don't rent the place you can be absent indefinitely and not have to pay CGT.
I suggest you look at the Income Tax Assessment Act 1996 near section 118-145 as there are a few relevant sections there.
Then look up the ATO legal database on the definition of main residence or principle residence.
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
You can nominate one property as your PPOR for a period of up to 6 years after you move out, even if you are renting it out. You can not, however, have more than one PPOR at at time. The ATO has some very solid material on this on their web site. So, you can claim either A or B as your PPOR, but not both at the same time. So, A would have been your PPOR, then you can select to keep A as your PPOR or have it replaced by B (providing B was in fact your PPOR for a period of time)
As for reporting income from B if it was your PPOR, income that you ear is income, regardless of how you do it from the ATO's perspective – so yes, it is reportable income. On the flip side, you can also claim expenses.
To prove that a property as your PPOR, you have to show that you lived in there and that you took steps that a "reasonable person would take" to make it your PPOR.
Thanks.
I have 3 properties "A", "B" and "C" and I'm renting at "D".
You meant that I have to report the rental income for all 3 even I want to treat "B" as my PPOR. Righit?
Then can I claim the rental fee of "D" as my expenses?And can I know the meaning of "reasonalbe person would take"???
You have to report all income to the ATO, including rents.
But you may be able to class either A or B as your main residence, but not both at the same time. Because you lived in A before buying B you may even be able to class A as your main residence for this period, and B or A for the next period – up to 6 years in total. You cannot claim both for the same period.C is being rented and you have never lived in it, so it doesn't count for the main residence CGT exemption.
Property D is one you are renting so you cannot claim rent paid for this – unless you are running a business from the home, and then you would only be able to claim part of the rent as you are living in it too.
The reasonable person has no real bearing on the matter. Look up TD51 for the factors taken into consideration in determining whether a place is your main residence:
http://law.ato.gov.au/atolaw/view.htm?locid=cgd/td51/nat/atoWhether you are reasonable or unreasonable it would still be your main residence if certain criteria are met.
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
OK, I got it.
Thank you all.it is reportable income. On the flip side, you can also claim expenses
then is it possible to claim the interest of PPOR as the expenses in the renting period?Thanks.
You can claim expenses your PPOR if it is rented.
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
Ah, then you meant that I can claim the renovation fee and interest even PPOR if I'm renting out?
So is it possible to get whole exception of CGT in the following case?
1. year 1: living – no claim
2. year 2- 6: renting out – for this period I'm doing renovation, and claim the renovation fees and interest of the loan (with income reporting to ATO)
3. year 7: living – no claim
4. year 8-12: renting out – claim expenses like above again
5. year 13: living and Sell (no other PPOR selling in this period).Can I still get the whole exception of the CGT at the end of above process(year 12)?
Thanks Terry.
I believe it may be possible. But remember you cannot claim capital works upfront, only depreciate it.
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
But remember you cannot claim capital works upfront, only depreciate it.Sorry, could you explain a bit more? I'm not good at this.
what's the "capital works upfront" for example?
what's the "depreciate it"my main focusing of the claims are
– interest of the PPOR loan
– PPOR renovation fee
– depreciations of PPOR buildingAre they "capital works" or "depreciate works"?
Thanks a lot, Terry.
Capital works is the building and anything or most things attached to it. You can't claim the cost of the house construction for example. Depreciation is the gradual loss in value of an item and the ATO allows you to claim a portion of the cost of an item to compensate for this. eg. Building works can be claimed at 2.5% per year for 40 years.
Fittings are another item that cannot be claimed upfront but only depreciated. This includes carpets, light fittings, hot water systems etc. These smaller items can generally be claimed over 5 to 10 years.
Repairs can generally be claimed in one year. Something is generally considered a repair if it is brought up to the same condition as it was when you purchased it. So replacning a roof may be a repair if the same materials are used, but may be an improvement if you put on a better roof. Tax implications would differ.
So "renovation fee" may be claimable depending on what it is exactly.
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
I understood now.
Thanks a lot~~, Terry!
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