Hi Guys,
I have been trying to seek some clarification to the below scenario but haven't had much luck.
I am potentially moving overseas and I am looking at leasing out my PPOR to a long term corporate tenant (7 year + lease).
My plans are to put the lease in place and most likely in 12-24 months sell the property as an investment to cash up. Taking into account the 6 year rule how will the ATO view the sale if I signed up a tenant for over a 6 year period up front? My aim would be to still sell it under PPOR conditions as I will have no other properties within Australia.
Any help would be great.
Not an accountant etc etc
Based on teh information provided there will be no tax payable provided this proeprty has been your PPOR for your whole period of owenrship before moving overseas.
The property was your PPOR and you will sell it within the allowable 6 year window, Whether or not it has a lease extending beyond the 6 year period is irrelevant – CGT is levied based on what has happened and not what will happen.
Be aware that having a tenant in place will restrict/reduce the number of potential buyers when you sell. The lease will need to be honoured by teh new buyer and therefore someone looking for a home will not look at your property as there is a tenant in place with a long term lease.
Any other property as main residence in another country ?
Cheers,
Rob
Hi Rob,
I am not 100% sure but I expect any CGT will be determined by the tax laws in the country where the property is.
But the question is will another main residence overseas mean they are unable to class the place here as a main residence.
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
Thanks Everyone.
From what I understand I believe the ATO would only take into consideration Australian owned properties as they would have no jurisdiction over overseas owned property.
Derek, In regards to restricting the potential buyer pool if I have it tied up with a long term lease I agree with you there, but I have given it good thought and being overseas I think having the least hassle by not leasing it out to the general rental market is my best bet.
Surely there is still a good market out there for small/medium investors that see value in a long term secured leased residential investment. In most instances it is quite difficult to secure long term tenancies unless you own commercial property (Besides DHA and the like)
Daniel.
Daniel
ATO doesn't need jurisdiction to consider you have a main residence overseas. The Tax act says:
s118-145(4) ITAA 1997
"If you make the choice, you cannot treat any other * dwelling as your main residence while you apply this section…"http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s118.145.html
I had never considered it before, but having a main residence overseas would probably be counted and this could mean the house in Australia may not qualify for the exemption.
Rob would know better than me though.
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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