Tax advice - CGT and PPR

Hi ,

I’ve recently purchased a house for a PPR. We are currently living in a family home and want to rent the new purchase out for around 12 -18 months to save some money before we move in.

Would it be better to:
A)leave the house vacant for 6 months then Rent
B) put a renter in for 12 months and pay CGT on that period?

If I went with B - and I sold in 10 years would I have to pay CCT on the profit for entire period?

My accountant doesn’t specialise in house tax so was a little confused at their answer (lesson to get experts in your corner)

thank you

Daniel

 

It depend on whether the house will grow in value or not and whether it will be you main residence at death and a few other things

 

Thanks Terry,

let’s say I sell after 10 year period and make a profit.

Would it be better in terms of CGT to not have renters in for 6 months?

That would mean
-I leave vacant for 6 months
-rent out for 12 months
-move in and lived in PPR for 9 years.

would you pay CCT on the 12 month period?

If subject has been discussed in previous forums apologies. If anyone has links please feel free to share.

 

you would need a crystal ball to work it out. If you move in at settlement it could be CGT free. If you rent it out for 12 months and sell after 10 years 10% of it would be subject to CGT.
If you left it vacant for 6 months and then moved in for the rest of the 10 years 5% of it would be subject to CGT.
But even though it is subject to CGT it could still be free of CGT if no profit has been made or if the cost base expenses exceed the gain.

 

Why would you leave it vacant for 6 months? Home buyers grant? If you leave it vacant I expect you won't get the grant.

 

Sorry what I meant was leave the property vacant (or technically make this your Principle place of residence for 6 months). Change postal address etc. and use the 6 months to renovate and improve. So records show initial use of house was Place of residence.

 

leaving it vacant will mean it is not your main residence.

 

If I change my address to my new main residence and send all of my bills to the house. I spend 6 months fixing up. Live there most of time. Do that for 6 months.

After 6 months then rent out for 12 -18 months?

after 18 months In total I move into the house full time for hopefully a long period.

Thanks for your help and taking the time to reply.

 

If you are asking how you can pretend its your main residence, I can't help as it would be fraud.

 

If I lived there how would it be fraud?. Ok thanks for the advice good to know the rules around it. Appreciate you’re help for someone that is starting out and learning what to do.

 

If you lived there then it might be your main residence

 

Ok thank you Terry . After speaking with another tax accountant I have decided to move in to the new place and rent out my other place I am living in now making it my investment. That sounds easier.

appreciate your responses.