I m recently settled on my FHG unit, with a fix term tenant. by law, I have to wait for 6 months (the end of the fixed term lease) before I can move in myself.
1. I want to know, if in future, I want to sell this property covered by CGT Main residence exemption, will I have to pro rata this first 6 month period? since it's not my fault that I can not move in right after settlement.
2. During the 6 months , I guess I have to claim the rental income. but can I in return claim the assocaited cost during that period(eg. loan interest, strata etc..) ? if yes, will that regard this unit as a IP rather than a FHG hence risk my FHG ?
3. If the answer to Question 1 is Yes , plus I dont claim the associated cost during that period, can I then add that cost onto my cost base to reduce the CGT tax when I sell?
Thanks very much !
1. Yes, you have to pro rata the first 6 months, and pay CGT on this portion. You bought the unit knowing that it had a tenant, so you have to pay the CGT.
2. Yes, you have to declare the rental income, but you get to claim the interest, council rates, water rates, etc for the first 6 months also. Depending on your level of borrowing, and the rental yield, this may be a loss.
3.You would be better off to claim the rental costs agains the rental income, as it gives you an immediate deduction, rather than waiting until you sell the property.
thanks very much for your advise.
thanks very much for your advise.
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