CGT and PPOR

[zimby]

Howdy

Quick question, So we've lived in our PPOR for more than 12 months.
We decide to rent it out and move out to rent ourselves.
Can we still claim this property as our PPOR for Tax proposes and apply the 6 year rule if we decide to sell?, even tho it is now an income producing asset and we reside elsewhere.

Below site explains but having an argument with a business banker buddy who is adamant that I will have to pay CGT if it produces income.

https://www.ato.gov.au/General/Capi...ng-as-your-main-residence-after-you-move-out/

Cheers

 

[DaveM]

If you do not claim another property as your CGT exempt PPOR (ie you rent the whole time) then your current PPOR should fall under the 6 year rule.

 

[Terry_w]

tell your buddy (after making a wager) to look at the law on this s 118-145 ITAA 97

 

[zimby]

awesome thanks heaps!!

 

[Paul@PFI]

Howdy

Quick question, So we've lived in our PPOR for more than 12 months.
We decide to rent it out and move out to rent ourselves.
Can we still claim this property as our PPOR for Tax proposes and apply the 6 year rule if we decide to sell?, even tho it is now an income producing asset and we reside elsewhere.

Below site explains but having an argument with a business banker buddy who is adamant that I will have to pay CGT if it produces income.

https://www.ato.gov.au/General/Capi...ng-as-your-main-residence-after-you-move-out/

Cheers

A few catches to this issue:
1. If you have another main residence anywhere else in the world you may have to make a choice to tax one or the other. In your question you don't indicate if you "reside elsewhere" and one of you owns it ??
2. If you have two residences you can choose which is taxed. That choice occurs when you act and choose how to treat the Cap Gain in the tax return (or choose it as exempt)
3. If you choose to be exempt with #1 and defer the tax to the other property and it works out to be larger then that's bad luck. However in most cases people choose to defer the taxing and it is indefinite perhaps never ever sold....

Your banker mate should avoid giving unqualified tax advice. If you earn rents the period is capped at 6 years. If its not rented the CGT issue is indefinite.

Just watch land tax. Its a different issue.