Travel Nurse PPOR rules?

Hey everyone,
My partner and I are about to buy a property to rentvest by which we will occupy it for 6 months, then rent it out while we choose to live in a more desirable location to make the most of the 6 year CGT exemption rule. We will be joint owners at roughly 50/50.

I will occupy the house the whole six months. However, my partner is a travel nurse currently doing contracts of up to 12 weeks. Does this have implications on the 6 year rule? And if so, is there any way to make it work e.g. Limiting her contracts to a max of x weeks at a time, or she has to sleep in the house for at least 51% of that time, or she has to make sure she doesn't sleep in any one location more than our house, or anything else?


Thanks

 

You are after the main residence rules for CGT.

The owner of the property must first occupy it before they can be absent, there is no 6 month requirement. It just has to be the main residence, initially, and to move into as soon as practicable after settlement

 

Thanks Terry. There are so many rules and timeliness I got a bit confused. That's really great to know.

We are also using the FHSSS which has that 6 month requirement. How would that one work in our case?

 

Where does your partner live when away (in a hotel, on staff accommodation) etc? Could the accomodation be considered as an alternative home?

 

And for further knowledge, how would this work for the FHB stamp duty reduction if you use it and have a change of circumstance? I'm assuming you'd have to pay the ATO back? Would you also be fined for it？

 

She stays in hotels or facilities provided for travel nurses by the hospital. Sometimes the hospital may own or lease a house specifically for the travel nurses. It all depends on the contract.

 

I would recommend the travel nurse move possessions in and stay at least one night and then return from time to time as soon as able. If this isnt done then their half may fail the rules for super savings and also CGT. Each owner must consider their own position. She cannot be deemed to be resident in a dwelling if she isnt.

I would check the FHSS as it may fail if she isnt resident for the 6 month period. It may be possible to delay her start date under the "as soon as practicable" rule to the main resdience exemption which is also worded much the same in the FHSS rules BUT oit mentions 6 months. But how the FHSS law reads it does require then a continual period of no less than 6 months residing there. Residing is concern that doesnt attach to ownership itself. So if she lives where she works then she doesnt reside in the new home. .That may be OK under the CGT absence rule but not the FHSS rule as it doesnt provide exceptions. Now a holiday absence is likely OK but to move out and live and work elsewhere ? Hmmm I dont think that works. This could affect BOTH of you and invalidate the FHSS release and more. The release could become taxed.

• You intend to occupy the property you buy as soon as practicable and for at least 6 months within the first 12 months you own it after it's practical to move in.

 

Great insight Paul, cheers! At least for the PPOR CGT exemption it seems that it won't be a problem.

Coming back to the FHSSS, my question to that would be what does reside mean or at what point would what she does be considered moving out?

When she leaves for work, she can go with one suitcase for say, four weeks, then she'll come back for a week or two, then another four weeks. Does living out of a suitcase for a few weeks count as moving out? Is it basically as soon as you leave the house for longer than a week for a work, it could be considered moving out?

 

In Victorian FHB requirement is to move into the property within 12 months of taking ownership. You then need to reside in the property for 12 months.

I am aware of people who have had a change in circumstances and informed the SRO of the change. They've had to pay the appropriate stamp duty but were still eligible to get the concessions later. I'm also aware of people who have moved out without informing the SRO, getting caught and being fined.

If it were me I'd try to find a way to live there and keep it as your PPOR for 12 months, or I'd just buy it as an IP from the start.

 

That is a matter I belive you should discuss (anonymously of course) with FHSS to avoid signiifcant issues. The rules for FHSS says the contract should only be made after eligibility for the scheme is confirmed to avoid the repayment issues or failing eligibility. Thats what makes the super assessable. Generally reside may take its ordinary meaning. But then the specifics of the 6 month need to be considered from the point of the FHSS laws and views of that agency. Tax law cases have considered this at a high level and there is case law available for you to also seek legal advice from your SOLICITOR conveyancer...not a general conveyancer but I feel the FHSS agency will be the key determinant. Ask them .

 

Good idea, I'll give them a call. They're always so vague and difficult to get an answer from (e.g. When I called about using transferred Kiwisaver funds) that I'm not optimistic about getting an answer but hopefully a conveyancer will have an idea. Cheers.

 

Harsh or how the law was drafted ??
Law doent have a fairness indicator. It may be a issue for which there is no process too eg If it was a state revenue authority they may have a rulings process. The ATO administer the FHSS however cannot issue a ruling in respect of how a law is drafted and worded. Only on a issue of uncertainty.

I would argue the issue is this. FIRST the nurse MUST commence to occupy and then I would ask in a private ruling / FHSS determinatiuon if they may be absent as a FIFO worker or at a employer place of work etc and provide details. If they dont initially occupy I will expect the ATO ruling will be adverse.

Kiwisaver issues are complex and according to a ruling GN 2018/1 | Legal database you may need to make a determination request to have the correct portion correctly allocated by the ATO. First home super saver scheme | Australian Taxation Office

Certain KiwiSaver and other transfer amounts from foreign super funds are eligible contributions for calculating your FHSS maximum release amounts. For more information, see GN 2018/1 First home super saver scheme.

An eligible KiwiSaver amount must be included in your FHSS determination request as a personal voluntary (after tax) contribution, with the date it was credited to your Australian super fund account. You can't split this contribution over different financial years.​