Can anyone tell me the rules that determine if a house is your principal residence.
I have a rental that I plan to move into in the future.
Sean
Sean
I think the rule is 6 months for every 7 yrs.
One a year is my plan!!
Sean
are you talking from a tax point of view or from the point of the first home owners grant.
Turisimo i’ve never heard that before ??? but that doesn’t mean you are wrong.
regards westan
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I believe if you use the property as your ppor first and foremost then you can rent it for a period of not more than 6 years and then move back in and it is still regarded as your ppor.This is my interpretation from The Guide To Capital Gains Tax.A publication I received from the ATO.
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There is a specific tax ruling on this topic. I can’t seem to fin the reference at the moment, but you need to prove that you were living there at some stage. eg Electoal roll, electricity statements, mail at that address, etc.
Terryw
Discover Home Loans
North Sydney
[email protected]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
be careful with this 6yr rule for although it continues to apply, my understanding is that under the new mini-budget it will now be subject to land tax, hence not as attractive as what it use to be.
julie
Found it. please have a look at
http://law.ato.gov.au/atolaw/view.htm?locid='CGD/TD51/NAT/ATO‘CGT Determination Number 51
Capital Gains: What factors are taken into account in determining whether or not a dwelling is a taxpayer’s sole or principal residence?1. Whether a dwelling is a taxpayer’s sole or principal residence is an issue which depends on the facts in each case.
2. Some relevant factors may include, but are not limited to:
(i)
the length of time the taxpayer has lived in the dwelling
(ii)
the place of residence of the taxpayer’s family
(iii)
whether the taxpayer has moved his or her personal belongings into the dwelling
(iv)
the address to which the taxpayer has his or her mail delivered
(v)
the taxpayer’s address on the Electoral Roll
(vi)
the connection of services such as telephone, gas and electricity
(vii)
the taxpayer’s intention in occupying the dwelling
The relevance and weight to be given to each of these or other factors will depend upon the circumstances of each particular case.
3. Mere intention to construct a dwelling or to occupy a dwelling as a sole or principal residence, but without actually doing so, is insufficient to obtain the exemption.Terryw
Discover Home Loans
North Sydney
[email protected]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
If I recall correctly from last night’s news, the definition for the purpose of this new tax is that a property is considered your PPOR if you have lived there for 2 years.
Reno
Thanks for the help everyone.
If I understand this right if I rent my hous eout for a few years now while I’m in London and then move into it for a few years when we come back we will have no problem with teh new stamp duty.
Great news
Sean
Sean
SeanOlivia,
You cannot exempt a house as your PPR until you at least move into it. The only exemption is if you are renovating it and then move in for at least 3 months. Renting it out from the time of purchase will always mean that you will have a portion of the capital gain subject to tax. Once you move in & establish your PPR as per TD51 you can move out again and exempt the house for up to 6 years, move back in and get another 6 years etc but you can never exempt it 100% if you have rented it out when you first purchased it. Note when playing the 6 year game you cannot exempt the house you are living in as a PPR if you want to exempt the house you are renting.
Note this reply is only from a CGT point of view.
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