Tax Tip 23: The 6 year Absent from Main Residence Rule

1. Yes possibly
2. Yes possibly.

 

Thanks Terry

And no we didnt mean or want to cheat on our return. but we did not know of this 6 yr exemption until recently when we sold our Sydney property. You are allowed to claim any one property as ur PPOR right. Hence we thought since we havent declared the property in Brisbane as our PPOR when we sold it in 2015 we thought we can make the ammendment now and choose the sydney property as our PPOR

 

Yes you can only claim any one property at one time.

 

Yeah, nevermind, I realised I may have mis read what you wrote, so disregard, but it is not that unusual for people to ask for help in regard to cheating on open forums as newer members

 

I couldn't find it but I hope somewhere in this thread someone points out that as of 9th of May 2017 this will be changed and no longer be the case and should you live overseas (eg be a non Australian tax resident) the 6 year PPOR capital gains rule no longer applies (from 2019).

eg - Capital gains tax property exemption tool

 

The use of the absence rule is being phased out from 30 June 2019 when an aussie becomes a non-resident for tax purposes. The phase out applies to those who already claim the exemption at 9th May 2017. Anyone moving out of AU after that date may find the loss of the CGT concession is immediate.

The calculation basis for those who become non-resident will become more and more complex and I suspect many will overlook other concessions and this could expose DIY taxpayers to either underpaying tax or overpaying tax if they dont correctly use s118-192 of ITAA97 IF they can. Or if they cannot there can be other ways.

I believe more than ever taxpayers will need to seek property savvy tax advice to avoid errors. So much for cutting red tape

 

We purchased our first IP in March 2016. It's under mine and my partners name.

Spent about 3 or 4 months renovating it after settlement. During this time, at one point or another, we had services (besides internet) connected under mine and my partners name. We were living elsewhere in a family owned apartment where our services are connected under our name but there's no official lease of any sort in place.

The house was rented out after the reno was completed through a propert

Could we put the house as our PPOR and claim we lived there before renting it out?

 

You can only reside in a property you occupy as your MAIN residence and then depart it - Its not a choice if not eligible..Its does not seem eligible as you MUST reside in a property for THREE months after reno's to get the exemption. If you completed renos and then rented it its not eleigible in most cases

Personal tax advice to determine if the exemption is available AND its consequences to the other property should be considered.

 

no

 

Didn't think so but thanks anyway.

 

Had a chat to a tax accountant yesterday...he is saying as far as he understands we have to return to our PPOR to be able to claim 6 year CGT exemption rule. I don't think this is right, am I right in saying that? I thought you only return to reset the 6 years period, not to actually be able to claim the 6 year CGT exemption

 

No need to return.

 

The key requirements to access the 6 year absence exemption are

1. It must have been a main residence for the FAMILY not longer than 6 years ago; and
2. You must have ceased to reside in it; and
3. Not chosen another Australian property (a new rule) eligible for CGT exemption by you OR partner during that 6 year period. (If you rent this can be a no brainer, otherwise you need to consider the effect of a choice)
4. You now need to continue to be a tax resident of Australia too

Its not that uncommon to find tax advisers who dont know property tax well. Shouldnt happen but many tax people do actually seek to avoid property taxes as they see it as too complex.

 

Thanks. But I thought that you can apportion the exemption? For example if we stop residing in our PPOR in Jan 2010 and have to move because of work and sell the PPOR in end 2016, we can still claim the 6 year exempt and pay 1 year worth of CGT?

 

Tax Tip 109: CGT and Being absent from the main residence for more than 6 years Tax Tip 109: CGT and Being absent from the main residence for more than 6 years

 

Thank you so much everyone and especially Terry, been most helpful.

 

HI

I have had to move for work to another city and my husband has stayed in the main residence. What can I treat my new residence in the new city as I now reside there but the main residence is in both our names and my new one just in mine as I now live there the majority of the time.

 

You might have the choice to treat either as the main residence, but not both for the overlap. Keep good records of all expenses on both properties to reduce CGT when sold.

 

You can claim both....Not 100%...Only 50% of each.

When your spouse or children live in a different home to you

Fortunately you can make that choice when the first of any property is sold. So if it didnt go up much in value and the other does it may make sense to choose the one with better value change.

 

Hi all,
Could anyone help me to answer this question? I understand there is no requirement for how long we have to stay in the property since acquired to be considered as main residency. If I stay there for 1/2/3 months initially then rent it out, Is it qualified to be main residency in terms of 6 year rule?