PPOR for Investment Property

Discussion in 'Legal Issues' started by Timwest, 24th Feb, 2016.

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  1. Timwest

    Timwest Well-Known Member

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    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 Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    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

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    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

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    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

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    What is the motivation for staying there for 3 months? Stamp duty discount?
     
  6. Timwest

    Timwest Well-Known Member

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    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

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    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

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    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

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    @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 Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    See my tax tip on this topic
     
  11. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    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

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    Thanks @Terry_w do you have a link to the tip?
     
  13. Phantom

    Phantom Well-Known Member

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  14. wobbycarly

    wobbycarly Well-Known Member

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    (*) Only if there is no other PPOR during the same period.
     
  15. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    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

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    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 Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    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.
     
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  18. Marg4000

    Marg4000 Well-Known Member

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    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
     
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  19. wobbycarly

    wobbycarly Well-Known Member

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    LOL - of course, that's what I meant, but I can't quote the section numbers like you can. :D
     
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  20. The Y-man

    The Y-man Moderator Staff Member

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    Much easier way to avoid CGT: sell it at a loss because you paid way too much!

    The Y-man