First IP

[jraff]

Hi Everyone,
Firstly I want to thank all who posted on my last note. I have just purchased my first IP and am just waiting on finance approval which I'm assured all is well there.
Personally I think I got a great buy, 6 yr old home in pristine cond which needs absolutely nothing doing to it in an upcoming location south of perth. Initially listed at $419k and my offer of $387k was accepted so i'm pretty happy.
As I stated in my last post,my son and partner are going to rent it from for at least 2 yrs at a little under market rent as I wont need a PM so I'm passing that saving to my son.
As I am renting myself atm, I am going to move into it for a breif period then my son will take it.
I wont be charging him a bond or the usual rent in advance etc so can anyone tell me what I need to do to be able to neg gear it and claim a tax benefit ie: any doc's I need to lodge etc.
Is it as simple as him paying the rent into my bank and I carry on renting the home I'm in.
I will be buying a new PPOR in Mar-Apr next year which I will be living in full time.
Thanks in advance
Jim

 

[matto_]

I assume you are moving in first to alleviate CGT onb this prop and have it as your PPOR whilst renting. Great idea.

When you purchase your next prop this status will change as you can only have one (1) PPOR.

 

[jraff]

Yeah. I'll move in for a short time then back to the rented place.

 

[Terry_w]

Yeah. I'll move in for a short time then back to the rented place.

But will this be enough to establish it as your main residence? Get some advice if this is your intention.

Also if you intend to claiming expenses you will need to consider what effect, if any, renting to a related party for under market value has.

 

[jraff]

Will run it by my accountant on monday to get his view. As far as I'm aware from past experience, I bought a place (PPOR ) and sold within a mth. I rang the ATO and was told that there was no time limit as long as it is my PPOR. That was around 10 yrs ago and I know some things have changed but will get clarification on it.

 

[Terry_w]

Will run it by my accountant on monday to get his view. As far as I'm aware from past experience, I bought a place (PPOR ) and sold within a mth. I rang the ATO and was told that there was no time limit as long as it is my PPOR. That was around 10 yrs ago and I know some things have changed but will get clarification on it.

That is a different situation. Here you are moving in and out quickly and will retain the property. It could be viewed that the dominant purpose was the tax benefit of establishing it as the main residence for the 6 year absence rule.

See also TD 51 (now withdrawn, but still relevant)
Capital Gains: What factors are taken into account in determining whether or not a dwelling is a taxpayer's sole or principal residence?
http://law.ato.gov.au/atolaw/view.htm?docid=CGD/TD51/NAT/ATO/00001&PiT=19920326000001

 

[jraff]

Thanks Terry, Will check that out.