CGT 6 year rule - reasons for leaving PPOR

Hi all

I've trawled through these forums and other websites researching the CGT 6 year rule.

One thing I'm still a bit unclear about is the acceptable reasons for leaving your PPOR to claim the rule. I know a person can claim this for needing to move house for work reasons or moving overseas.

Are there any other acceptable reasons?

Does anyone know what is acceptable for moving house for work? How far does a person need to move? Is it acceptable to move, say, 20km from your PPOR, in the same city? I know that a person declares their PPOR in their tax return - how does the ATO check the necessity of a person needing to move house for work reasons?

Thank you all in advance!

 

no reason needed.

 

Terry is spot on. No reason is needed. However.....You must be able to show you actually made a property your MAIN RESIDENCE and thats the part that could fail. eg length of time occupied, all your belongings moved in, connection of services and a intention to occupy rather than a transient choice to stay. So if you move in intending to depart 2 days later that will not be acceptable as a main residence and therefore the absence rule would fail. But if you move in and then an event occurs which is reason for you to vacate that could be fine (eg lost work due to covid lockdown)

The generally accepted view in Kotaki Para Rubber v FCT is often cited :

``The place of residence of an individual is determined, not by the situation of some business or property he is carrying on or owns, but by reference to where he eats and sleeps and has his settled or usual abode.'' As well a continuity of living arrangements which was a matter in Customs v Perkins Shipping

In short periods the establishment of a main residence could be questioned. The onus is upon the taxpayer to satisfy the Commissioner to avoid excessive assessment and penalties.

 

Thank you both that really helps me to understand.. Finally!

 

Also note this is only on sale that main residence exemption is declared.

 

Thanks so much everyone.

If a person claims the 6-year CGT rule, are they still entitled to claim deductions while the property is leased in those (maximum) 6 years (and of course, also pay income tax on rent received in that time)?

 

if the property is income producing they can claim deductions as per normal

 

if someone moves overseas and becomes a non resident for tax purposes and sells while a non resident they can't use the six year rule anymore. some very limited exemptions apply.

 

I have a related question. I purchased an IP (rented out for 6 months), then moved in as my PPOR (lived in for 1 yr), then rented out as IP again (for 2 years), and am now selling. As I made it my PPOR, can I claim the CGT exemption for the past 2 years? As in I only need to pay CGT proportionally on the first 6 months and am exempt for the past 3 years?

 

You could potentially use the 6 year rule to treat it as the main residence for all but the first 6 months