This may be a simple questions – I though it was but some recent articles have me concerned…
I bought a unit and moved into it for 4 months – I had a housemate for those 4 months – then I had a job offer interstate and moved.
Since then I have been renting it out…
Is this now treated as an IP from the date I put it on the rental market?
Thanks!
Since then I have been renting it out…Is this now treated as an IP from the date I put it on the rental market?
Thanks!
Hi Thinker,
I believe this was an IP from the moment you advertised it as a “renter”. But there could be other issues – one of those is the CGT exemption of “your own home”. Will you get to retain the CGT exemption on sale down the track? I don’t know…
This seems to me to depend on a few things:-
1. Did you claim the unit as your PPOR?
2. Did you use FHOG to buy it?
3. Are you now living in another PPOR?As I understand it (and, I’m NOT an adviser, or accountant, so this is just my “take” on things) you can live somewhere, claim it as your PPOR, then move out for up to SIX years – as long as you don’t purchase another PPOR in that time (are you now renting?)
The FHOG issue adds a further dimension of which I have little knowledge. If you DIDN’T use the FHOG, then the above should apply, but if you DID use FHOG, you should check this out in detail with your accountant,
Benny
Originally posted by Benny:Since then I have been renting it out…Is this now treated as an IP from the date I put it on the rental market?
Thanks!
Hi Thinker,
I believe this was an IP from the moment you advertised it as a “renter”. But there could be other issues – one of those is the CGT exemption of “your own home”. Will you get to retain the CGT exemption on sale down the track? I don’t know…
I am a little concerned about the CGT, I plan to keep it long term (10+) at this stage. I need to understand exactly what I need to do at that 6 year mark. e.g. Can I get a valuation and claim CGT only on the growth past that point assuming I don’t have a new PPORThis seems to me to depend on a few things:-
1. Did you claim the unit as your PPOR? I think soHaven’t claimed it either way yet but given my answer below it should be yes
2. Did you use FHOG to buy it?yes
3. Are you now living in another PPOR? no, renting in Sydney is cheap but have another (joint) IP.
As I understand it (and, I’m NOT an adviser, or accountant, so this is just my “take” on things) you can live somewhere, claim it as your PPOR, then move out for up to SIX years – as long as you don’t purchase another PPOR in that time (are you now renting?)
The FHOG issue adds a further dimension of which I have little knowledge. If you DIDN’T use the FHOG, then the above should apply, but if you DID use FHOG, you should check this out in detail with your accountant,
This could be tricky but my advice at the time was that their was no clear definition of PPOR or a conflict between state/territory and commonwealth law. Either way, my move was outside my control and not expected so at least there was some intent to stay (if this counts
) Thanks for your reply
BennyThinker,
Relax, you will be CGT exempt because:
a) as part of the FHOG you would have had to claim it as your PPOR to be eligible
b) you are renting where you are hence not claiming another place as your PPOR and beside, from my understanding, you were RELOCATED because of work hence there is not so much onus place on what is and what is not your PPOR during this 6 years, nonetheless….
c) you have 6 years in which you can rent it out and not lose your CGT exemption (however, if time runs out and especially because of your work situation (ie. relocation) you can just move back into it for say a couple of weeks, then restart the 6 year clock when you move out again)
You should have had a valuation done at time you moved out (each time) however you can backdate this (at a cost approx $400-$600 depnding on who you use) and keep it JIC (just in case) you decide to sell at any point (and remember the valuation fee for this service is tax deductible and can be factored into the cost base when calculating CGT if applicable)
Finally, if you don’t plan to sell it in the long term, the CGT should not be an issue anyway.
Cheers,
Jo
I wouldn’t try to claim tax deductions from the time you moved out otherwise a FHOG audit would show that you did not live there for the requisite 6 months and the grant would have to be repaid. I’m pretty sure when you signed the application, you agreed that:
â— I/we will occupy the purchased property as my/our principal place of residence for a continuous period of at least 6 months commencing within 12 months of settlement or completion of construction.[blink]
…oops.
F.[cowboy2]Yes I agree with Monopoly.I was reading the Taxpayers guide last night, and they claim that money from boarders is not counted as income for tax purposes. Therefore I would say that your property would only be classed as an IP from the date you rented it out. You then have 6 years from this date where you can still claim it as your main residence if you have not other property that you are also claiming as your main residence.
If you move back into your property at any stage, the 6 years will start again if you move out again.
Terryw
Discover Home Loans
Mortgage Broker
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
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