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6-year rule

Discussion in 'Accounting & Tax' started by htopg, 12th Sep, 2015.

  1. htopg

    htopg Well-Known Member

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    Does anyone here have the following similar experience?

    1. purchase a property
    2. has the intention to make it PPOR
    3. move in on the first date
    4. move out one week later due to financial reason
    5. rent out the house
    6. claim all interest, repair, depreciation
    7. claim CGT exempt using 6-year rule

    In particular, what have you done to convince ATO in regards of point 2?

    Thanks in advance
     
  2. thatbum

    thatbum Well-Known Member

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    Why would ATO need convincing about point 2? I would have thought points 3 and 4 would be key.
     
  3. Marg4000

    Marg4000 Well-Known Member

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    Unless you can prove a radical, sudden and dramatic change in your circumstances, to decide after one week you can't afford to live there is hard to believe.

    A PPOR is just that - a principal place of residence. You can't claim residence if you don't live there for more than a few days.
    Marg
     
  4. Scott No Mates

    Scott No Mates Well-Known Member

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    Point 2 is a mute point.

    You holiday in places for longer than that and can't call them your ppor.
     
  5. Beelzebub

    Beelzebub Well-Known Member

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    Move in for six months before you sell it.
     
  6. Ed Barton

    Ed Barton Well-Known Member

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    What difference will this make?
     
  7. Beelzebub

    Beelzebub Well-Known Member

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    You need to have lived in the property for six months and owned it for 12 for it to be considered a PPOR and thus exempt from CGT.
     
  8. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    I disagree with this. Legislation does not have these time limits
     
  9. Beelzebub

    Beelzebub Well-Known Member

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    Well there you go: I always thought that was the rule. There hasn't been any ATO or judicial rulings that shed light on what is a reasonable time? I certainly know I've heard the six month rule several times before?
     
  10. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Time is only one factor that is conisdered. there is an old ATO ID on the factors they take into account when determining whether a property is a main residencce or not
     
  11. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    The ATO can (and will) call BS on an apparent scheme to obtain the MRE to obtain a tax benefit. The Commissioner has the power to make his own mind. And doesnt have to defend it unless you take them on. The onus is on the taxpayer to demonstrate that the home was the taxpayers main RESIDENCE and was occupied. There are plenty who try (and fail) and get done for making a false statement. The penalties just get bigger. One little lie becomes a bigger one.....

    There are examples of taxpayers who fail because they lie and think the ATO don't check. ATO auditors have a job that includes checking for lies. There are genuine taxpayers who move out soon after moving in - A reasonably arguable position and facts will determine if the ATO call it out. The onus is then on the taxpayer to object / appeal etc.

    If the residence is newly constructed / renovated then there may also be a 3 month requirement !!