how long must you have lived in a home before claiming it as a PPR when selling it to be CGT exempt? Will accountant ask for proof when lodging return? Eg mail with that address on it etc? Thanks
in many cases can be 1 day (although you would need to have VERY strong reasons why you would only move in for a day) if you are changing main residences then you must have lived in the old main residence for at least 3 months for the changing main residence rule to apply INCOME TAX ASSESSMENT ACT 1997 - SECT 118.140 Changing main residences
And the key requirement that govern the time rule is that the relevant part of tax law describes a MAIN residence exemption. This contains two implied elements - The first being that the property was the residence of the owner/s and the second that it was the MAIN residence. Each view is subjective but often can be applied as a fact. Short periods of occupancy certainly raise a potential concern and may require more supportive evidence to duration where factors like utilities consumption etc act as a fact. I have encountered a client with such a case of one nights stay. In that case it was a specific situation and proof was retained. (Copy of ADF deployment orders) There are several sub rules within this and a spouse, defacto etc can also taint the main residence exemption. Newly constructed property or newly renovated property may require occupancy of at least three months immediately after completion to trigger the exemption to backdate to when the land was acquired as much as 4 years earlier. And then there is the other 3 month rule Mike referred to when you change residences. For these reasons I would generally recommend personal tax advice for any occupancy of under three months or where spouse, defactpo and relationship matters occur during the occupancy and ownership period. And where there have been potentially multiple properties. Its important to remember that the MRE does not operate by disregarding it in a tax return ! But in its simplest form the main residence exemption (PPOR refers to land tax laws) may be demonstrated with two examples A. Fred moves in. Fred intends to live in the home for the forseeable future and moves all belonging in using a removalist and connects utilities, new appliances etc and makes the property his home. The next day he heads off to work as a soldier and is advised he is being deployed to Turkfarkestan with two days notice. Fred would have a strong claim to the main residence exemption and be able to use the 6 year absence rule to maintain this while he is absent. B. Dave moves in to his new house. He only moves in to trigger what he believes will protect his property with the CGT exemption. He moves a bed and a few belongings in but intends to repaint and quickly let the property and the next day consults PMs and signs a agency agreement the next evening. He moves back to the parents home after three weeks. Dave is unlikely to have established a main residence. In any event Dave may have created a more complex problem. s118-192 resets the cost base at market value on the date the property first produces income. The add on acquisition costs like duty, legals etc may be lost as an element of the costbase. The exemption is a choice and Dave may even be better off ignoring any effort to seek to use the MRE especially if the intention is a long term (6yr +) hold.
for it to be exempt it has to be the main residence for the whole of the ownership period too. The way you have worded the above, it just sounds like you might want to move into a rental property briefly to try to avoid CGT
I have sold the property already - I had lived in the house for a number of weeks and want to claim it has PPR so CGT exempt.
I changed PPR a few years ago in Victoria and my accountant had a letter template to send off to the SRO for land tax changes.
Why is that? Tenants moved out - I moved in - and then sold the property? Once it settled I moved out
why ? its the law INCOME TAX ASSESSMENT ACT 1997 - SECT 118.185 Partial exemption where dwelling was your main residence during part only of ownership period subject to partial capital gain.
The brief period of occupancy (IF it is as a main residence) may have a trivial effect. It doesnt turn off the accrued tax issue eg Owned 5 years and one month. The one month was when it was occupied. 5 years as IP A : If it could be considered a MR. 1/61st would be exempt eg $100K profit = $1639 is exempt. Of the $98.3K only 50% is taxed. B. I would hazard to guess that based on the informationa nd questions that a brief period after occupancy was a attempt to seek exemption and if the house was already on market OR contracted for sale its NOT a main residence. Hence 100% taxed.
