I heard through the grapevine that if I buy a property and declare as a PPOR and live in it for 3 months, I can then rent it out for 6 years or less, move back in, and then it is still CGT exempt? Is that true?
I plan to buy a PPOR and was considering renting it immediately for a year to help pay it down a little bit but if the above is true, I might be better off moving in for 3 months first.
Thoughts?
s 118-145 ITAA 1997
True in certain instances.
If you rent the house out first it will always be subject to CGT – but the effect will be small if any.
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 thanks Terry! So very resourceful.
It doesn’t even mention that it requires you to live there for 3 months to start with?!? Interesting.
Nope. No minimum time listed in law. As long as the property becomes your main residence this section should apply – as long as the other requirements 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 another dumb question. I’m trying to find info about how one classifies their place as their PPOR but it’s still a touch unclear to me? The ATO states the following criteria:
* the length of time you live there – there is no minimum time a person has to live in a home before it is considered to be their main residence
* whether your family lives there
* whether you have moved your personal belongings into the home
* the address to which your mail is delivered
* your address on the electoral roll
* the connection of services (for example, phone, gas or electricity)
* your intention in occupying the dwelling.How does the ATO know whether I’ve done these things? Do I have to be able to show and keep proof of the above before I am able to rent the property out?
Its a question of fact. If queried you will have to prove you have lived there as your main 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
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