Converting IP to PPOR

Hi

There have been many topics covering converting PPOR to IP but I would like to know if I can convert an IP into a PPOR for tax purposes

For the loan I have looked to have it initially rented for a period but then will look to have it become our PPOR. I would like to live in it and would like to know if capital gains tax will apply if it converts from IP to PPOR

Is this possible and how would I look to structure it?
Will I have to pay capital gains later on as it will be registered for stamp duty purposes as an IP

We are looking to develop and want to know if I will pay tax on building down the track
 
Yes it can be done. CGT will apply to the property worked out on a time rented v time main residence basis when sold.

Structure it with a high IO loan with an offset - your plans may change and it may never become a main residence.
 
ip

having it registered under ip will surely attract CGT for the time you rented it out. there is no exception of 6 years here. however you want to convert to your home so there may be a chance of less CGT due to being main residence. i ould think you need to weigh up the cost of selling and buying another property to see if this is worth doing it.
 
having it registered under ip will surely attract CGT for the time you rented it out. there is no exception of 6 years here. however you want to convert to your home so there may be a chance of less CGT due to being main residence. i ould think you need to weigh up the cost of selling and buying another property to see if this is worth doing it.

Selling now just to reduce CGT may make things worse.

e.g if owned for 1 year, rented for 1 year and later sold 20 years later only 1/21 may be subject to CGT, less than 5% of the total gain. There would be items able to be claimed to reduce the cost base so perhaps no CGT would be payable.

But selling now before moving in would mean all of the gain (less costs) would be subject to CGT - perhaps 50% discount would apply. Depending on the growth there may be no CG to tax, but the owner would still be up for buying and selling expenses.

i.e. the impact of CGT would reduce each day the property is held as the main residence.
 
Selling now just to reduce CGT may make things worse.

i.e. the impact of CGT would reduce each day the property is held as the main residence.

Agree...But its possible that one property may appreciate in value differently to the other so that the pro-rata CGT issue isn't "fair". That's an unfortunate issue with a property that goes from IP to PPOR. You must apportion based on days. However a property that goes from PPOR to IP may use the market value at time of the change.

Unfair in three respects
1. IP to PPOR property MUST pro-rata based on days and cant use market values etc.
2. PPOR to IP MUST use valuation and cant pro-rata.
3. Sometimes the pro-rata can benefit taxpayer as the taxable days becomes a smaller and smaller part of the period of ownership BUT at same time a rapid and large spike in prices during the exempt period is still taxed albeit at the shrinking %...
 
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