Joe Bloggs owns an investment property in his own name. Joe also owns, with his spouse Mary as joint tenants, their principal place of residence. The land value of their principal place of residence is higher than the land value of their investment property, and both are above the land tax threshold. They currently pay land tax on the investment property (and none on the family home as it's exempt because it's their principal place of residence). The Bloggs reside in NSW. For lifestyle reasons, Mr and Mrs Bloggs want to move in to the investment property and want to rent out their family home. However, they want to keep the family home at their principal place of residence, using the six year rule. (Their plan is to move back within six year.) If the Bloggs were to execute their plan, I understand they will have to continue to pay the land tax on their investment property despite its not earning any rental income (as they would have moved in it). Their family home /primary place of residence, on the other hand, will earn rental income but will be exempt from land lax. Their rental income will be subjected to usual tax treatment and deductions. Can the gurus in the forum please corroborate or correct me on my understanding? Many thanks,
If they move into the rental property it would be the principal residence for land tax purposes and therefore exempt from land tax. The former residence will be subject to land tax, unless under the threshold. CGT is commonwealth legislation and is not connected to land tax. A main residence for CGT purposes is different to the principal place of residence for land tax purposes.
