Join Australia's most dynamic and respected property investment community

PPOR for Investment Property

Discussion in 'General Property Chat' started by Timwest, 24th Feb, 2016.

Tags:
  1. Timwest

    Timwest Well-Known Member

    Joined:
    11th Feb, 2016
    Posts:
    108
    Location:
    Sydney/Wollongong
    Hi,

    I am in the process of acquiring my first investment property. I currently don't have a PPOR and am considering making this investment property my PPOR.

    The ATO states: 'there is no minimum time a person has to live in a home before it is considered to be their main residence'

    See link: Is the dwelling your main residence? | Australian Taxation Office

    I am not overly keen to stay in the property for an extended period of time so would love to know what is and is not accepted by the ATO.

    If anyone has any recent experience and can explain what is enough to make it PPOR that would be excellent :)
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    8,942
    Location:
    Sydney
    Like they say there is no minimum period listed in the act.

    The place is either you main residence or it is not.

    To be the main residence you need to actually live there to the exclusion of other places of residences. You should also retain evidence of this in case audited later.
     
  3. Azazel

    Azazel Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    8,113
    Location:
    Brisbane
    Hey @Timwest , congratulations.
    I'm of the opinion that although a PPoR can be a good (or bad) investment, it's either an IP or a PPoR.
     
  4. Timwest

    Timwest Well-Known Member

    Joined:
    11th Feb, 2016
    Posts:
    108
    Location:
    Sydney/Wollongong
    So If I live there for 3 months and then move out this will this still be considered my PPOR? So long as I keep evidence of my stay, electoral roll, services, etc..
     
  5. Blueskies

    Blueskies Well-Known Member

    Joined:
    24th Aug, 2015
    Posts:
    189
    Location:
    Brisbane
    What is the motivation for staying there for 3 months? Stamp duty discount?
     
  6. Timwest

    Timwest Well-Known Member

    Joined:
    11th Feb, 2016
    Posts:
    108
    Location:
    Sydney/Wollongong
    No its just an arbitrary number that I made up as Im trying to find out what is a suitable amount of time to live there to claim the PPOR capital gains tax exemption.
     
  7. Blueskies

    Blueskies Well-Known Member

    Joined:
    24th Aug, 2015
    Posts:
    189
    Location:
    Brisbane
    Capital gains tax exemption will only apply for the 3 months that you live there then, when it reverts to being an investment property it will be subject to capital gains tax once more, you need to apportion the amount of time it was a ppor and the amount of time it was an IP when you come to sell.
     
  8. Paterson00

    Paterson00 Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    193
    Location:
    Perth WA
    I'm no expert either but i think that's possibly what your thinking of. If you sell a PPOR, to my knowledge there is no capital gains tax on ant profit vs a ln ip which does.
     
  9. Timwest

    Timwest Well-Known Member

    Joined:
    11th Feb, 2016
    Posts:
    108
    Location:
    Sydney/Wollongong
    @Blueskies I was under the impression that whenever a property is occupied as a main residence, it will be exempt from capital gains tax and under the six-year rule, a property can continue to be exempt from CGT if sold within six years of first being rented out.
     
  10. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    8,942
    Location:
    Sydney
    See my tax tip on this topic
     
  11. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    8,942
    Location:
    Sydney
    Depends on the circumstances. If you only sleep there part of the time and you have all your belongings at your parents then no it may not be uour main residence.
     
  12. Timwest

    Timwest Well-Known Member

    Joined:
    11th Feb, 2016
    Posts:
    108
    Location:
    Sydney/Wollongong
    Thanks @Terry_w do you have a link to the tip?
     
  13. York

    York Finance Broker Business Member

    Joined:
    24th Jun, 2015
    Posts:
    1,620
    Location:
    Sydney
    Paterson00, Terry_w and Timwest like this.
  14. wobbycarly

    wobbycarly Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    208
    Location:
    Geelong
    (*) Only if there is no other PPOR during the same period.
     
  15. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    8,942
    Location:
    Sydney
    Actually i think
    Only where no other property is treated as the main residence during this period. S118-145 (4)
     
  16. Hanison

    Hanison Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    241
    Location:
    Brisbane
    Now I'm sure I'm not the first person to think of this. However ...

    If a person purchases multiple investment properties over a lifetime and when it comes time to sell.

    Could a person move into each one of these properties sequentially, claim as main residence, then at such time sell. Therefore avoiding CGT.
     
  17. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    8,942
    Location:
    Sydney
    No because you can only have one main residence exempt for any one period.

    What you could do is to sell the main residence tax free and move into an ip.
     
    Hanison and Marg4000 like this.
  18. Marg4000

    Marg4000 Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    898
    Location:
    Qld
    No.

    You can only have one PPOR exemption at a time, so you would be up for CGT for all the times you weren't residing each IP.

    Likewise, the 6 year exemption can only apply to one PPOR, and only if during that time you are not claiming the exemption or residence for another property.

    Otherwise we would all be doing it.
    Marg
     
    Hanison likes this.
  19. wobbycarly

    wobbycarly Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    208
    Location:
    Geelong
    LOL - of course, that's what I meant, but I can't quote the section numbers like you can. :D
     
    The Y-man and Terry_w like this.
  20. The Y-man

    The Y-man Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    898
    Location:
    Melbourne
    Much easier way to avoid CGT: sell it at a loss because you paid way too much!

    The Y-man