Hi all Thank you all for your knowledge and insights. I am a first time poster but some time lurker on PC . I would be grateful for any advice regarding my circumstance. I am currently DIY renovating my IP prior to moving in in July. It has been untenanted during the last two years of renos. One of my children will occupy - for no rent- my current PPOR for 6 months whilst completing his own renovation. I then intend to renovate the current PPOR in readiness for sale in the second half of 2018. As it will be more than six months from the change of PPOR's how should I treat the potential CGT issues that may apply to the sale. Many thanks. SRK
You might have to apportion the time it was the main residence v the time not, or apply the 6 year rule.
Im confused. It not an IP if its reno'd for two years. Thats a profit making issue maybe ? Quite confusing regarding intent. Such a property may not even be eligible for the main residence exemption and isnt a CGT asset or has already triggered a CGT event rendering issues with use as a home I believe for the issues raised personal tax advice is suggested. Too many maybees. I dont think apportioning can apply that simply
Thanks for your feedback. I can see that my description of the situation was not very clear. Just to clarify. I am currently renovating a property that had been previously tenanted for 6 years. I will reside there as my main residence from July this year. My current PPOR of 16 years will then be occupied by my son for a short period as he completes his own home build. Upon his moving out I will then prepare that property for sale in mid - late 2018. As I can't have two main residence exemptions for more than six months, and I will have renovation & marketing costs etc for that property. How should I best approach this scenario from a CGT position.
You cant ever have two main residences on any day other than if you satisfy the overlap rule and sell the former house within 6 months of moving out. Making a choice to treat your former home under the absence rule would mean zero CGT but if you choose to treat the IP as your home it would then mean a pro-rata to give exemption in the future. Given you have a choice to go exempt or deferred the exemption of the proposed sale is a more immediate and measurable benefit.
All sorts of issues. Deductions: IP not available for rent the last 2 years and not intended to be rented again. Many repair/reno costs not deductible and not depreciable. Of course you weren't also claiming interest, rates, etc. during this period either. The exception may be where the vacancy was in order to get ready for new tenants. Maybe a few repairs that were effected in the income year the property ceased to be rented. 6 month overlap: 1. Did you initially acquire the IP intending it to be your PPOR ? 2. Yo need to sell the old PPOR within 9 months of vacating. If eligible, the 6 month overlap is backdated from the sale of the old PPOR.
You raise many pertinent points. I originally was renovating for future tenants and then decided about 15 months ago to make the IP my new PPOR. It is in a neighbouring suburb to my current PPOR. I have not claimed any expenses on the IP etc since that time. When I initially purchased the IP in 2006 I thought that I might possibly live in it in the future.The future has arrived earlier than I expected.
