CGT on PPOR

Hi,

A friend of mine purchased an apartment that he intends to be his PPOR. However, it was purchased with a tenant that has six months remaining on the lease. If he moves in as soon as the lease is up will he be liable for CGT if he claims deductions for the initial six months it was leased? Or would he be exempt from CGT as he wasn't legally able to move in? Can he avoid CGT if he doesn't claim any of the expenses for the 6 month initial lease period?
 
Yes. No. No.

Court cases are quite clear that delays in moving in because of tenants, working elsewhere etc don't stop the clock on capital gains tax running. Claim the deductions.
 
Of course the 6 month "taxable" period will dilute with time....ie after one years its 50%. (6/12 mths) After ten years its 5%. (6/120 mths)

Not claiming deductions (but paying tax on assessable rent) would add to the cost base but you would literally get cents per dollar off the CGT.
For example lets assume $10K of costs....That $10K CGT reduction = $5K taxable gain x 5% after 10 years = $250 reduction in the taxable cap gain.

Just claim the neg gearing while its rented.
 
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