[learning curve2Member@learning-curve2Join Date: 2006Post Count: 36]

July 15, 2012 - 9:35 am

hi all
what about any capital gains in the first 6mths when sheranj lived in the property? i read….

Normally when a property is first used as a residence and then is rented, capital gains tax is payable if the eventual selling price exceeds its market value when it ceased being a residence.

http://www.smh.com.au/money/on-the-money/how-to-qualify-for-the-cgt-main-residence-exemption-20101229-199zy.html

Does this mean that any capital gains made in the time you bought the property to when you move out to rent it, it will be subject to CGT even though it was your PPOR?

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July 14, 2012 - 9:56 pm

hi all
so if i was to move in and live in it for a month over xmas/new year (while catching up with family), do some things that need to be done ie: garden cleanup, some painting etc., get the bills in my name, change address on mail it would be enough? it would be on annual leave from my work.

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July 13, 2012 - 10:18 pm

Hi Jenny11

that is what i was querying. i was just asking the question of Blackhotel whose partner did this and i was just asking if she was still working at the time…it seemed to be a little fruitless if she was

thanks

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July 13, 2012 - 1:15 pm

thanks again, terry. i will of course investigate further but you have given me a great base to build upon

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July 13, 2012 - 1:11 pm

oh i get it…..

so, i can move in to Property B for a few months (to gain the CGT exemption) and then out again returning it to be an investment and the interest would be deductible again, but not against Property A but against Property B.

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July 13, 2012 - 12:48 pm

hi
but previously you said that….

So assuming this is an interest only loan only 73% of the interest will be deductible once you move into property B.

i am confused

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July 13, 2012 - 12:21 pm

thanks for all your advice, Terry. you have been a great help and i have a lot to think about. the only reason i would move back in is to gain the exemption, not a lifestyle choice. also the info on the IO is very interesting.

and sorry for asking again (i don't fully understand), but from what you say below…..

'If property B was rented then loan 2 would be deductible too because it relates to this property. If you move in and out again you may still be able to claim the main residence CGT exemption'

…is it true that i can move into Property B for a few months (to gain the CGT exemption) and then out again returning it to be an investment and the interest on Property A becomes deductible again?

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July 13, 2012 - 10:24 am

thanks terry
so it is best to keep Property B as a rental property then? Another idea is if i moved in for a few months to gain the CGT exemption then out again, does the interest on Property A become deductible again?

should i pay off the loan?

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July 13, 2012 - 10:13 am

thanks so much for explaining that terry
so does this apply only for the year it happened? i redrew the money in january 2012 and both properties were rented. i don't intend to move in till january 2013 so that is a new financial year. will it be less 27% for the 7mths of this financial year?

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July 13, 2012 - 9:45 am

I now have $94,000 left to pay (due to the $58,000) and have $80,000 in the offset which by October will reach the amount so I can pay it off completely. 

is that a wise move now?

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July 13, 2012 - 9:39 am

hi terry
i withdrew $58,000 from the loan taking it from $150,000 up to $208,000 and placed that into the redraw of the house that is still under the 6yr rule hence my idea of moving back in to keep that. i eventually intend to rent it out again.

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July 13, 2012 - 9:19 am

hi terry
can you give me an idea on what kind of issues?

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July 11, 2012 - 10:59 pm

hi all
yes i lived in it for 11mths first (when i bought it in 2006, moved out early Jan 2007) before having tenants in there (fingers crossed) till January 2013 which equals 6 years.

so the best idea is to move in straight away (ie scrap the idea of the 2 mths i plan to leave it vacant) so then it will definitely reset the 6 year clock and there will be no CGT to pay

OR

in the whole course of owning it for a long time, what is 2mths of CGT to pay as long as the clock then does start again when i move in?

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July 11, 2012 - 9:13 pm

hi blackhotel

this is getting closer to want i need to understand. i intend to move back in for a 3 to 6mth period or so (to restart the 6 years)…just not intending to do it straight away when the tenants leave in January. Will do it say, 2 mths after that. So is leaving it vacanct enough (as per the website info) or is Dan right when saying….

'You can only leave it indefintely and still call it your PPOR, as long as it never earnt income.If it was rented out, you must move back in within six years for the property to remain CGT free.

You will need to move back in after the tenants move out, to keep the property CGT free.'

another point, i understand having all my ID and bills to that address but i will still be working in sydney for that time….won't that come up as being weird? did your partner still work in QLD in this time period?

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July 11, 2012 - 7:02 pm

[/quote]
Sorry to burst the bubble but that's not right.

You can only leave it indefintely and still call it your PPOR, as long as it never earnt income.If it was rented out, you must move back in within six years for the property to remain CGT free.

You will need to move back in after the tenants move out, to keep the property CGT free.
[/quote]

hi all
just a bit confused as i don't want to move in straight away after the tenants leave. i want to leave it vacant for approx 2 mths than move in. Dan's reply above states that if i do this i won't be eligible for the exemption as it once earned an income.

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July 11, 2012 - 10:06 am

hi
me again and sorry to be so annoying but these are the sites i saw the vacant property info on (under Full Exemptions)

http://www.quinns.com.au/blog/2010/08/11/how-to-avoid-capital-gains-tax-while-renting-out-your-house/
http://finance.ninemsn.com.au/pfproperty/investing/8123489/rent-out-your-house-and-avoid-capital-gains-tax

They say….

'This process can generally be repeated for any amount of time and the property will remain exempt from CGT. The same can also be said if you rent the property out for six years, then leave it vacant from there on in.'

and….

'If you rent your house out for six years then leave it vacant thereafter, it remains CGT exempt'

= still confused!

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July 10, 2012 - 5:17 am

oh well. it was worth a shot. i have read all different stories, so the next plan is….

say i move back in say 6mths after the 6 years are up. does that mean i still only have to pay CGT on the increase in value over that 6mths? is it then wise to get a valuation done on the property just before the 6 years are up and then another when i move back in?

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July 6, 2012 - 1:50 pm

Thanks Terry

I was just after clarification on the CGT aspect.

Great news to hear that I can leave the property vacant and not have to move back in myself after the current tenants leave and still bequalify for the exemption when I eventually sell it.

Thanks again for the advice

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July 5, 2012 - 11:38 pm

Hi Dan
Do you mean that I wouldn't be eligible if I just left it vacant for 2 mths or so after the tenants move out in early January (ie not earn any income on it) and then get new tenants or move in myself after that time?

I read that leaving it vacant would be sufficient enough. It is still a little unclear to me

Thanks

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July 5, 2012 - 1:34 am

Thanks Terry
I am just concerned about being eligible for the CGT exemption when I come to sell it later and was just enquiring about the minimum length of time it could be left untenanted. The interest doesn't apply as the house will be paid off by then….no more mortgage!!!