Hi all
This is a simple question, I think, which I’m sure has been raised previously, but I’m unable to find advice that is clear.
The question is this: Does the ATO require individuals to have a reason (other than for financial gain) to rent out their PPOR in order to rent elsewhere and use the six year rule to maintain CGT for the property for up to 6 years while treating that PPOR as an “investment property” (thereby enabling the write off of interest, depreciation etc etc) in the interim?
Context is this:
My friend owns his own place. It’s a nice property, but has a huge debt attached to it. Money is a bit tight for him, so I suggested that an option was that he could rent it out (where he’d get $600 per week rent) and move elsewhere to rent a property at $400 per week. I explained that he could save quite a bit a cash this way, thereby reducing financial stress…
Per week he would save:
$200 due to only having to pay $400 rent for a place he choses to live, while at the same time receiving $600 in rent from the potential tenants in his place.
He would also make substantial tax savings, as the place he owned and rented out would then be treated as a investment property. So he could write off the difference between incomings (rent) and outgoings (interest repayments, depreciation, body corp fees, rates, water service fee, landlords insurance etc).
I have asked my accountant the question previously, and he seemed to think that there had to be a reason other than for financial advantage.
I checked the ATO website and it states
• Moving from your main residence could be for reasons such as:
o accepting a new job interstate or overseas
o staying with a sick relative long term, or
o going on an extended holiday.
Does anyone know the answer to this?
This is a simple question, I think, which I’m sure has been raised previously, but I’m unable to find advice that is clear.
The question is this: Does the ATO require individuals to have a reason (other than for financial gain) to rent out their PPOR in order to rent elsewhere and use the six year rule to maintain CGT for the property for up to 6 years while treating that PPOR as an “investment property” (thereby enabling the write off of interest, depreciation etc etc) in the interim?
Context is this:
My friend owns his own place. It’s a nice property, but has a huge debt attached to it. Money is a bit tight for him, so I suggested that an option was that he could rent it out (where he’d get $600 per week rent) and move elsewhere to rent a property at $400 per week. I explained that he could save quite a bit a cash this way, thereby reducing financial stress…
Per week he would save:
$200 due to only having to pay $400 rent for a place he choses to live, while at the same time receiving $600 in rent from the potential tenants in his place.
He would also make substantial tax savings, as the place he owned and rented out would then be treated as a investment property. So he could write off the difference between incomings (rent) and outgoings (interest repayments, depreciation, body corp fees, rates, water service fee, landlords insurance etc).
I have asked my accountant the question previously, and he seemed to think that there had to be a reason other than for financial advantage.
I checked the ATO website and it states
• Moving from your main residence could be for reasons such as:
o accepting a new job interstate or overseas
o staying with a sick relative long term, or
o going on an extended holiday.
Does anyone know the answer to this?
