IP to PPOR

[Petergm]

We are considering purchasing another house that we wish to make our PPOR when we sell our existing home.

However, we dont wish to rush and sell our home immediately and would prefer to wait until we get our price. Therefore we intend renting the new house for a 6 or 12 month period.

Are weable to cllaim tax deductions such are negative gearing and depreciation during the time that we rent the property? If so, what are the problems of then making the property our PPOR once we sell our existing home?

[Adam B]

hi peter gm
a couple of ideas
you are only allowed one ppor at a time.

there is however a term the ato has , 'main residence' that may be worth looking into. you dont have to live in a house for it to be your main residence.

i believe it IS possible to rent out you current house for up to 6 yrs and claim deductions and depreciation and pay no cgt on the sale.

this way you could move into the new house straight away and still get rent from the old one, cgt free if you havent rented it previously, and should you sell the up and coming 'new' place into the future, i believe there will be no cgt to pay because it was never rented/available for rent. 6 yrs may help you get the 'money you want' for it too!!!!

the ato says you can stipulate what property was your main residence after the sale of it. a mighty nice gesture i think.
check it out at ato website.
Should you rent the new place out before you move into it, there is no way you can claim it 100% as your main residence because first your main residence has to be your ppor to claim it as such. So if you do sell some cgt may be payable.
buona notte
adam

[Simon]

Check out the ATO website for the regulations on this.

You are allowed to claim two PPORS for the time taken to sell the first one if it overlaps - there is a limit from memory it is 3 or 6 months. Check their website.

Cheers,

[Adam B]

hey simon.

I am aware of some instances when constructing a new residence that there is an overlap permitted.

Do you have some more info on what you know about as i would love to be able to have a change over period. Sounds like money in the bank!

Always keen to learn*
ciao
adam

*learn = make more $$$$$$!!!!!

[Simon]

http://www.ato.com.au/individuals/content.asp?doc=/content/31570.htm&page=11#P2454_204101

Tells us that:

Moving from one main residence to another
If you acquire a new home before you dispose of your old one, both dwellings are treated as your main residence for up to six months if:

the old dwelling was your main residence for a continuous period of at least three months in the 12 months before you disposed of it
you did not use it to produce assessable income in any part of that 12 months when it was not your main residence, and
the new dwelling becomes your main residence.
If you dispose of the old dwelling within six months of acquiring the new one, both dwellings are exempt for the whole period between when you acquire the new one and dispose of the old one.

If you disposed of your old home before 1 July 1998, both homes are exempt for a maximum of three months.

Hope this helps,

[Adam B]

fantastic!

thanks heaps simon.

ill be using that ruling on my very next deal!

adam