Deductions and avoiding CGT by moving from PPOR to IP

[miss green eyes]

Hello.
Could anyone point me in the right direction - I am looking for deductions that I can claim against an IP.
I know about the very basics. Interest and, um, that's about it.
I'm interested in capital depreciation as I will be looking for a new apartment. Not brand new, but less than 20 years old.
If anyone could provide any info or point me towards some websites I would be grateful.

Also, can I avoid CGT using the following strategy:
Purchase PPOR (property 1). Then purchase IP (property 2).
Live in PPOR. IP shoots up in price. PPOR goes down in price. Owner moves from PPOR to IP (for how long?). Property 2 becomes new PPOR. Property 1 becomes new IP. ie IP and PPOR swap places. Owner sells property 2 (the original IP) CGT-free.
Would this work????

Thank you in advance.

 

[coastymike]

Property 2 will not be CGT free. As you did not move into Property 2 from the beginning you could not elect for the 6 year rule to apply from the beginning to Property 2.

However you are eligible for some relief. You are entitled to a partial exemption because you lived in Property 2. The capital gain or capital loss that you will make is calculated on the number of days the house was not lived in by you compared to the number of days they owned the house.

So a portion of the gain will be subject to CGT. However if you had Property 2 as an investment property for say 2 years and you moved in and sold the property after 2 years and 1 month you wouldn't be reducing your capital gain by much at all.

 

[miss green eyes]

Thank you coasty.
Any websites I could browse?

 

[bluestorm]

Generally people check these things out before they start investing (to make sure the numbers work). (you would hope!!). Otherwise it's not an investment but a speculation.

A good place to start might be the ATO itself. They release a yearly booklet on all the deductions available for rental properties.
Rental properties 2010 PDF

As coastymike states, Property 2 will not be CGT free, as you did not live in the property at the start, so the 6yr rule does not apply. Also the information on CGT calculation is correct.

Also, if you used any money from Property 1 to fund Property 2 IP, that previously tax deductible portion of the loan with then become non-tax deductible, as you are now using the property 2 for private use, and not as an investment.

 

[miss green eyes]

Thank you for your replies.
No, haven't bought the IP yet. Just settled on the PPOR.
I learnt the hard way when purchasing my PPOR that I should do research before purchasing.
I am getting as much info as I can before I buy the IP. Aiming to purchase start of 2012. Sideways house prices = good time to buy. But have to balance that against the usual downtime market fears (losing job, losing PPOR, living on the street etc etc).
I will read that ATO doc.
Can anyone recommend a good accountant? I'm in Sydney. The specific area in Sydney doesn't matter. I can go to them. But not interstate. Not all accountants are created equal so I'm looking for one who will give good property advice.