corporate rentals and 6 year rule

[jerky]

hi all

would like some advice re the 6 year rule, and corporate leasing of apartments:

I have to move out of my PPOR apartment (which is in my name only)and go look after/clean out dad's place as he is in hospital and not looking good at all, sadly we think he will pass in the next few months,
my partner and I had discussed staying out at his place and cleaning up to a state in which it can be rented out, but then we still have the dog which we cant bring back to the apartment.
So, we thought we will rent out the apartment, not declare a new PPOR but stay at dads until he passes, then rent out his place and then purchase a new PPOR closer to town but with room for doggie. (might be 12 months away).
My question relates to the 6 year rule for the apartment, please correct me if I am wrong, but I should be able to rent out the apartment for the period we are at dad's place and not impact any cgt until we purchase the other new house (which we might have to do this in partners name only to avoid cgt later on?)
My second question is, how does the tax office know that I have now made the apartment to an IP? I was intending to let it out to corporate clients which means I think we leave the utilities on in our name?

Sorry for the jumbled email, I hope you can understand I am not thinking all that well at the moment.

Thanks,
jerkygirl

 

[Propertunity]

Sorry to hear about your Dad.

My question relates to the 6 year rule for the apartment, please correct me if I am wrong, but I should be able to rent out the apartment for the period we are at dad's place and not impact any cgt until we purchase the other new house ...

Correct. Live in a PPOR, move out for up to 6 years. Don't claim another PPOR in this period. Move back in again (within 6 years). No CGT. Then move back out again & repeat the cycle. No CGT.

My second question is, how does the tax office know that I have now made the apartment to an IP?

You will make claims for depreciation, mortgage interest and utility bills in your next tax return. You'll claim these expenses against the rental income you receive.

If the PPOR will be neg geared as an IP you might even do an Income Tax Variation form and the ATO will know even sooner.

 

[Rob G.]

The only worry is whether your "letting to corporate clients" is more than a mere residential property, e.g. short term traveller accomodation or commercial use. Then the absence concession does not apply.

You need to check with your accountant exactly how you intend to use your old PPOR whilst absent.

Cheers,

Rob

 

[vmay]

Ppor

So if I was to let my property as a short term rental (holiday let) then that would mean I would be liable for capital gain?

If so then letting as a fully furnished executive rental would ok?

 

[Rob G.]

No ...

If the property was used in a commercial manner, such as an apartment used in a hotel/motel business etc. then it might not qualify.

You use the term 'corporate rentals' implying some sort of commercial business operation.

Cheers,

Rob

 

[jerky]

Thanks for the replies, may not be going the corporate route now, since the real estate agents said they were not interested without a carpark!
Guess it will be a long term let after all.

 

[jerky]

valuation

Hi there

So I am going the permanent rental route, moving the PPOR to IP, in order to get a valuation is it better to get my bank to do it (cheaper cost) or an independant such as CBRE? I got quoted $400 plus Gst, is that reasonable?

Thanks again!

 

[Terryw]

Hi there

So I am going the permanent rental route, moving the PPOR to IP, in order to get a valuation is it better to get my bank to do it (cheaper cost) or an independant such as CBRE? I got quoted $400 plus Gst, is that reasonable?

Thanks again!

Will your bank give you a copy of the valuation?

 

[jerky]

Just chatting with my bank (NAB) now, apparently they only do the vals for their own lending purpose and not for the cgt purpose.
So I guess a private valuer is the only option. Gees good work if you can find it at 400 bucks for a visit!

 

[jerky]

Just chatting with my bank (NAB) now, apparently they only do the vals for their own lending purpose and not for the cgt purpose.
So I guess a private valuer is the only option. Gees good work if you can find it at 400 bucks for a visit!