CGT TAX

Scenario:

I want to purchase Property #2 (IP). I currently reside in Property #1 (PPOR).

I change my existing loan for Property #1 (PPOR) into an IP.

I then purchase Property #2 and make it into a PPOR. I then sell this 12 months later to take advantage of capital gain on the property (and this becomes CGT exempt).

I then change my Property #1 back into PPOR

Is this allowed?

 

It could be allowed depending on some things

 

What are the main dependant factors?

Is it a time thing? ie hold onto it for a certain period
Or is it more of an intention thing ie if the ATO can prove/makes an allegation that you were never really going to use it as a PPOR because they have some of evidence for it etc

 

If you choose to claim the 2nd as your PPOR yes you can avoid CGT on that one but you'll pay it on the other for the 12 months.
Choose which is more beneficial to you.

 

You can generally only claim one property as the primary residence at a time.

 

this may help

Tax Tip 165: Not all Main Residences are Exempt from CGT https://www.propertychat.com.au/community/threads/tax-tip-165-not-all-main-residences-are-exempt-from-cgt.26254/

 

it might work depending on the calcs and what you do with property #1.

if you rent property #1 and was never used for income producing purposes and then rent it out the cost base would be reset to market value when first used to produce income.

if property #1 doesnt move in value in that one year then no gain.

then worth applying the exemption to property #2.

that would achieve the required result.