Turning your PPOR into an investment property and then back again

Hi Rhys

No you don't.  Great, isn't it?

K

Hi Mat

You could do that, but you can only claim one house (except for 6 months cross over) as your main residence at any one time.
So if you are living in your new house and claim the old house as the main residence for 6 years, then you will be liable for CGT on the new house for this time. So what you would do is to wait and see which one has the least capital gain – maybe, or you could just delay CGT by claiming exemption on the one you are selling regardless of which one has gone up more, depending on your situation.

If you own no other house you were claiming as your PPOR then you pay no CGT. When you move back in the clock resets and you can move out again and claim another 6 years.

Nice hey!!!

Hey Ben,

From what I have gathered in my own case, when looking at CGT exemption, is that you must have lived in a property before you can have any CGT exempt status. And you can only have CGT exemption for one property during any given period. I hope that makes sense. Best to get advice tailored to your situation from an accountant.

Also, did the property make a CG in that two year period? Depending on the circumstances it may not be a big cost to factor in.

Andrew

Hi guys,

Sorry to bump this old thread but I am trying to work out my situation. I will probably speak to an accountant before making a decision but just some advice in the interim would be great.

Bought PPOR (Property 1) in 2009 lived in until 2013 at which point we moved out, rented it and purchased another property which became our PPOR (Property 2).

Now in 2017 if I was to sell property 2 claiming it as my PPOR for CGT purposes and move back to Property 1 for a few years before selling it, would I
1 – need to pay CGT on the total gain from time of purchase.
2 – Pay CGT for on the gain between the first date of renting and the date of moving back.

Thank you, Anthony

Hi Hawa,

As I understand it, you can only have one PPOR at any one time – so, at some point, ONE of those two would not be your PPOR for a period.

Now in 2017 if I was to sell property 2 claiming it as my PPOR for CGT purposes and move back to Property 1 for a few years before selling it, would I
1 – need to pay CGT on the total gain from time of purchase.
2 – Pay CGT for on the gain between the first date of renting and the date of moving back.

It depends on what “it” means above.

You first talk of selling property 2, and I believe Terryw has answered you as if “IT” referred to Property 2. i.e. no CGT to pay.

However, the phrase “move back to Property 1 for a few years before selling it” seems to refer to Property 1 in that instance.

In THAT case, I would think you WOULD be up for CGT – at least for the period in which Property 2 was your PPOR (2013 to 2017). That could require that you get a valuation of Prop1 as you move into Prop2, and again as you move back into it in 2017. The difference between the two values might be the “gain” that you could be assessed for. Or, it might be a “pro rata” apportioning….. e.g. you had it as PPOR for 4 years, then rented for 4 years – so maybe 50% of the gain?

In that instance, again Terryw is the right one to answer it, so I’ll leave it to him to put us both right !!

Benny

I have a situation, which I don’t see as unique but it does have some complexity
1. Divorced in 2011 buying ex-wife out of house – I have 2 boys (19/21)
2. In Nov 2013 moved to NZ for work, renting house out
3. In Nov 2014 moved back to AU into new wife’s house – married Mar 2015. She has 2 boys (25/28)
4. Looking at moving back into my place before 6 years is up.
5. We have a Deed of Agreement (pre-nup) for assets and will which means that her house, super and shares are all 100% hers and I will never receive these should she pass or we divorce – correspondingly, same applies to her in respect to my assets.

My understanding is that because I re-married, that I instantly take on a PPoR being my wife’s house, even though I will never receive anything from that.

If that is the case, does:
1. This mean I am required to pay CGT should I sell my house – if so, when does the calculations start ? OR
2. Does it mean that we are changing PPoR and because I owned it previously, if we live in it for a year, that there will be no CGT

We are tempted given the above to apply for a ATO private ruling as it is clear I will not receive any benefit as I actually never owned another house.

Thanks

Hi Terry,

thank you for your reply. Can you elaborate on why I will not be subject to CGT on my place – is this purely because I returned before 6 years was up ? I thought as soon as I was considered to have a new PPoR (by re-marrying) that I would be liable for CGT when I sold it after a year.

Does my wife’s property then start CGT counter when we move in and therefore it is best to get it valued before / at the time we move ?

Thanks