Help!! 6 Year Rule (Main residence CGT exemption)

Hi there

I'm currently purchasing a property with the following legal ownership: 90% will be owned by me, and 10% by my dad, as he's helping me with equity/borrowing capacity as this is a dream home for me.

I'm just wondering, if we all move in to the new property (with my parents), then rent it out after some time, can I rely on the 6 year rule (main residence CGT exemption)? I'm currently single. What if my dad wants to treat a different property as his main residence during the next 6 years, could I still rely on the main residence exemption on my portion of the property (90%)?

Is there any minimum time it needs to be a main residence in NSW?

Many thanks for your advice.

Cheers
Dave

 

You possibly could.

Your dad would still be subject to CGT on his share of the property.

No minimum time period listed in income tax legislation (commonwealth)

 

Many thanks Terry. Does the ATO have a list of "acceptable reasons" for moving out of the property?

Although there is no minimum time stipulated in the legislation, would 3 months or 6 months be considered too short?

Cheers
Dave

 

No reasons are necessary - generally.

3 months could be enough if you move in and treat it as the main residence/

 

No thats OK. The key issue isnt about meeting a minimum. The key concern is proving you did fully reside there until moving out. A example of what doesnt work is just having a bed and spending a few nights with the parents while in reality you have all your things at your girl friends unit.

Two issues with a time factor is a first home buyer concessions eg duty and NSW land tax. Both of these may impose a specific period of residence to avoid issues.

 

Thanks Paul.

You just got me thinking - I presume there is no exemption for the purposes of land tax during those 6 years while it's treated as a main residence (after having moved out)? Or is there also an exemption for land tax?

 

In NSW there is a 6 year rule for land tax but unlikely it would apply if you are renting the property out.