First home buyer trying to avoid/minimise future capital gains tax

Hi all,

I need some advice on minimising and hopefully avoiding CGT on my first home purchase when it comes to selling in the future. I am about to purchase an established home and will take advantage of the governments FHOG. I am in Victoria so I believe this will equate to $10,500. I intend to purchase a property for around $390,000 at auction on the weekend.

I intend to live in the property for the initial 6 months in order to satisfy the requirements of the FHOG and then rent the property out. I have a net income of about $1000 per week and I estimate the repayments will be about $500 per week on a $350,000 loan. Although I can get by with the money I have left over I figure that it would be best to rent out the property as quickly as possible to begin saving for my next investment property.

Given that the house will be CGT free if I decide to live in it for 12 months is it better to live in the house for 12 months rather than 6 months?

The real estate agent has also told me that the vendors of the property I am looking to buy may be interested in staying in the house for a short while after the settlement if their new house is not ready in time. If I decide to rent it to the vendors after settlement (say for 2 or 3 weeks) will this affect CGT in any way. I read some stuff on the ATO website that said I need to move into my new property as soon as practicable. If I do let them rent for a few weeks is it possible to "pretend" I was living in the house during that period when it comes to tax purposes or should I just tell them to move out on settlement date?

Any advice would be very greatly appreciated. I have every intention of purchasing the prperty over the weekend but am just wondering what I should plan on doing about the tenant that want to possibly stay on and rent for a short time and whether it is advisable to initially live in the house for atleast 12 months.