Hi Guys,
After 6+ months of research I have just had an offer accepted on my first property. The catch with the property is that the sellers wish to rent back for 11 months while they build a property on the front block for them to eventually live in.This will still allow me to move in before 12 months and claim FHOG benefits.
Now my question. Is there any exceptions to the Main residence rule which says I have to move in as soon as practicable?
The ATO clearly says: If you could not move in because your new dwelling was being rented to someone, you are not considered to have moved in as soon as practicable after you acquired your ownership interest.
However they also say: If there is a delay in moving in because of illness or other unforseen circumstances, the exemption may still be available
Could this case be classed as "unforseen circumstances"? or am I just dreaming
Hi Minds eye
Which State is the property located in?
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
The property is located in Perth, WA.
Thanks
Ok as long as you reside in the property for a continuous period of 6 months commencing within the first 12 months of ownership you would qualify for any First Home Owners Grant.
Course depending on the purchase price of the property you may lose the stamp duty concessionary rate.
Worth talking to your Solicitor about this.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Richard.
I am quite sure that I am able to claim FHOG benefits. Sorry, I should rephrase my question:
Can I treat this home as my PPOR for CGT purposes?
You will be able to while you are living in it. While it is being rented out you can't treat it as a PPOR.
Hi Nathan. Thanks for your input!
Technically an IP can be treated as your PPOR for up to 6 years after you move out.
My problem is that I'm not sure if I can treat this as my PPOR in the first place.
Hi minds-eye,
I am aware of the 6 year rule but believe the property must first be your main residence. As copied from your link….
As a general rule, a dwelling is no longer your main residence once you stop living in it. However, in some cases you can choose to have a dwelling treated as your main residence for capital gains tax (CGT) purposes even though you no longer live in it.
You cannot make this choice for the period before a dwelling first becomes your main residence.
In saying this, having it as an investment property could be a good thing?- you should be able to claim part of the purchasing costs etc.
As Nathan mentioned you cannot apply the 6 year CGT exemption rule if the property has been rented out first. You need to have had it as a PPOR from settlement date for it to be considered.
There was a thread in this forum about a month ago where a buyer had a tenancy ending about 2-3 weeks after they settled which meant they were automatically precluded from applying the rule.
Cheers
Tom
Thank you Nathan. Can you please explain why this is relevant to my situation?
You cannot make this choice for the period before a dwelling first becomes your main residence.
To me, it sound like this would apply If you wanted to sell the property and claim CGT exemption before you ever move into it
Hi Tom,
I had a feeling that might be the case.
Oh well. Thought I better ask just in case!!
Thanks.
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