Hello,
My Wife and I have been living in our PPoR for 3 years.
We are required to move interstate for work (for approx 12-18 months), and are considering renting out our PPoR.
I believe in such a situation, that I am entitled to rent it out for up to 5 yrs without me incurring CGT should I sell in the future.Obviously, the rent I receive on this PPoR will be taxed as part of my income.
Therefore, expenses associated with this PPoR will be tax deductible.
These deductible expenses include: Interest on the loan(s), monthly acct fees(?), council rates, water, mgmt fees etc.My question is, what period are these deductions valid for? is it the period that the PPoR is actually rented out, or is it the period that it is 'available for rent', or is it the period that I am not living there?
Secondly, I guess that capital depreciation is also deductable during this period? I'm hoping to finish some kitchen renovations before the move interstate, which would mean that there should be some signifant depreciation to claim for the 12 months that I will be away. (i.e. first year of depreciation of brand new kitchen & appliances using 'diminishing value' method would be a few thousand $$!!).
If that's the case, I might try and sneak in a few other depreciable capital improvements before I rent it out… e.g. fresh coat of paint.Am I on the right track? or does depreciation go hand-in-hand with CGT?
I wonder if I might be trying to have my cake and eat it too!Cheers.
You can rent it out for up to 6 years as long as you don't buy another PPOR interstate.
The expenses can be deducted from when the property is available to rent.
Depreciation and capital allowance deductions would, in my opinion, be deductible to you. CGT law would require you to add back any capital allowance claimed during the ownership period, when the house is sold. But as ths 6 year rule exempts you from paying CGT, any adjustments to the CGT cost base are exempted as well. In other words, you wouldn't have to pay the capital allowances back if you weren't required to pay CGT.
It does sound like 'having your cake and eating it too', I agree, but I can't find anything that prohibits depreciation and cap allowance if no CGT is required to be paid.
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