Forum Replies Created
Thanks again Terry
Scott – its a hypothetical situation
Adam Sweeny
http://www.diypropertyinvestment.comThanks Terry, you really know your stuff. Since it’s a) then it begs the question in what scenario is it actually useful to get a valuation done (with regards to minimising CGT)?
If i reverse the example and move in for the first year (PPOR), then rent it out for 1 year and no longer treat it as my PPOR (say i buy a second place), would the valuation after the first year then be taken into account?
a) would be the same as in the first example; but
b) would then be 600 – 520 = 80k – discounts adjustments etc etcOr do I have a choice here with regards to which method is used?
Adam Sweeny
http://www.diypropertyinvestment.comHi Corey / Richard
That’s definitely good advice above, but if I wanted to learn more details where can I find further information on some of those things you mentioned?:
– A finance/loan structure that supports the next investment
– “The right lender”
– “Getting it right from the start”Cheers
AdamAdam Sweeny
http://www.diypropertyinvestment.comThanks Terry
Yep that’s along the lines of what I was thinking; move in for 3-6 months, electoral roll, phone, internet, electricity, gas, bank statements, mail etc etc.
Thanks for the article feedback as well – much appreciated!
Adam
Adam Sweeny
http://www.diypropertyinvestment.comHaha Benny, think we both posted at the same time there!
I have read that page before, and yeah it doesn’t specifically address the restarting of the time. I think my second post above is about as much info on the topic as is available on the internet, which is why I’m really trying to find if anyone has some real life experience with ATO regulation. Like you said, maybe a private ruling is the only real way to know.
The reason I want to know is two-fold:
1. I want to restart the 6 year timer on my investment property in a few years time ;)
2. I recently wrote an article on 11 strategies to minimise your capital gains tax and really want to clarify this area for everyoneThanks for your help so far guys
Cheers
AdamAdam Sweeny
http://www.diypropertyinvestment.comThanks Benny/Terry
I have located the relevant section Terry mentioned s118-145 ITAA97
(2) If you use the part of the dwelling that was your main residence for the purpose of producing assessable income, the maximum period that you can treat it as your main residence under this section while you use it for that purpose is 6 years. You are entitled to another maximum period of 6 years each time the dwelling again becomes and ceases to be your main residence.
So to rephrase my question: What needs to be done after 6 years of renting it out to qualify it as my main residence?
The following information is provided on the ATO website:
The following factors may be relevant in working out whether a dwelling is your main residence:
– 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.A mere intention to construct or occupy a dwelling as your main residence – without actually doing so – is not sufficient to obtain the exemption.
It’s still unclear to me as to what needs to be done. So getting back to my original post, does anyone have any experience with ATO regulation in this area?
Regards
AdamAdam Sweeny
http://www.diypropertyinvestment.comMy understanding is that the 6 years are cumulative between multiple properties, so if you’ve had the other IP for more than 1 year then CGT would start to be accumulated. BUT it would only be for the proportion of time that it exceeds the 6 years, so this when combined with your 50% discount should be a relatively small amount.
Have you spoken to an accountant yet? Interested to hear what they say.
Regards
AdamAdam Sweeny
http://www.diypropertyinvestment.comThe original definitely works however the post seems to focus on cheap regional properties… personally I don’t have the time to spend researching a regional area thoroughly as described.
I did just skim through the comments, but the only other strategy I saw mentioned was renovating to possibly manufacture positive cash flow.
Has anyone mentioned yet a less attractive but more realistic option? You purchase a negative cash flow property in a high growth area e.g. a good suburb in melbourne/sydney, then suck up the monthly shortfall for a few years until a combination of rent increase and mortgage repayments turns it cashflow positive.
Cheers
AdamAdam Sweeny
http://www.diypropertyinvestment.com
