Ppor tax

hi ,
How many properties can someone renovate and on sell befoure having to to pay tax
If the stratergy is buy as ppor fix and sell befoure you are a property trader ?

 

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Really , i will have to be carefull I asked my advisor today and he said I can do it

 

If you buy a property with an intention to reno and sell as a profit it would be taxable even if it was your main residence. That is the law.

You might get away with it if lucky though.

 

Surely it depends on how quickly you are turning them around?

 

question for your accountant ? does the cgt provisions and therefore the main residence provisions apply to trading stock.

 

I reckon if someone did one house every two years they'd fly under the radar.

If they did get questioned they could just say it's a ppor. I renovated it to make it comfortable and I sold it to move closer to work, family, up grade etc etc

ATO : " Mr Jones, you lived in a 6 level apartment like block and you claim it was a ppor?"

Mr Jones: "yeah that's right"

ATO : " But there are 24 bathrooms?!?"

Mr Jones : " yeah, well I pee a lot"

ATO : "Mr Jones you're peeing on my trousers, MR JONES stop it or I'll double the penalties !!"

 

As Terry said- It's your intention that counts not the number you do or the time you do it in.
If you intend for it to be your PPOR (and it is) and you renovate then decide that you want to sell it and buy something else then it's OK.
If for example you bought a house, renovated and sold, bought a very similar house in the same area, renovated and sold someone might ask questions as it looks like you are buying and renovating for profit.
I think in an audit you'd have to justify if you bought, renovated and moved a few times, claiming all were your PPOR.

 

No, it doesn't actually.

 

Many taxpayers are shocked when they realise there are also ways for your own home to be taxed and not access the main residence exemption..even if you do live in it. Same principles. Buying a "home"to renovate a promptly sell is NOT tax free.
Read TD 92/135

This explains the concept that an intention to profit is old law and prevails over CGT rules which are relatively newer laws. This is especially important to those who think they will reno then sell after 12 months to get the 50% discount.. If thats the plan it likely fails.

There is also a "trading stock" rule contained in CGT law which can trigger a capital gain if your intentions change. An example is you own a IP and decide the demo it, build villas and sell them. So even without a sale CGT can be triggered.

There may also be GST conequences to some renovations