Leave PPOR as IP and rent myself????

[AshleyS]

I would love to hear some ideas and thoughts on what is going on in my head at the moment!!

I currently own my PPOR and 3 other IP's. I am moving to Victoria in 4 weeks and will be renting my PPOR. I will be in Vic for 3 years, then I will return to SA.

What are peoples thoughts on leaving my PPOR as a rental when I return from Vic and rent myself for another 3 years (6 year rule) and in that time borrow against the other IP's and the PPOR to purchase more IP's.

Then at the 6 year period, move back into my PPOR.

Cheers

Ash

 

[Propertunity]

Then at the 6 year period, move back into my PPOR.

That will work Ash...............but you've got 3 years to decide - a lot can happen in that time

 

[buzzlightyear]

As an alternative to what? Purchasing in Melbourne?

As for the strategy, did this myself (although still lived in Melbourne) and can recommend it for those who are looking at continuing to build an IP portfolio. Of course, with rentals payments increasing relative to mortgage payments over the past 12 months, that gap isn't a big as it once was, but still there.

BTW, if you live in Melbourne for three years, why would you ever consider going to back to Adelaide?

 

[AshleyS]

Thanks Prop / Buzz - I am being transfered to Vic for work reasons (Air Force) and then I will be coming back to Adelaide to live.

Defence provide rental assistance unless you have your own PPOR in your posting locality, so... when I move back to SA I have to live in my PPOR unless I choose to rent privately, in which case I will not receive the rental assistance.

If I rent for the next 3 years, borrow and buy more IP's, then at the 6 year mark, move back into it. Then I have to decide whether I want to keep living there or sell it. If I sell it, then I am able to receive the rental assistance and purchase more IP's.

I quite like the idea of renting. I have rented for the past 11 years, it suits my lifestyle.

 

[moyjos]

I quite like the idea of renting. I have rented for the past 11 years, it suits my lifestyle.

In that line - I think you have answered your own question

 

[Propertunity]

In that line - I think you have answered your own question

Yes you're right but the issue is whether or not to move back into the ADL PPOR to comply with the 6 year rule - this gets Ash the added advantage of having this property CGT free on sale (if Ash were to sell at some point).

 

[moyjos]

If the issue is just to save the tax...Live in it for the minimum time allowed.Then move out again and rent.

(How long is that by the way?? Is it just a case of having that address registered to you on the electoral roll, an electricity account and phone bill in your name at the address...In which case is probably no longer than 3 months or so.)

 

[AshleyS]

Yeah I would only move back to save on the CGT. Good question moyjos, I wonder how long it is too.

Anyone else done this?

 

[Propertunity]

Good question moyjos, I wonder how long it is too.
Anyone else done this?

Ppl do this all the time. No set time specified by the ATO but I'd do 3 - 6 months min if I were in Ash's position.

 

[lifelonglearner]

Please could someone explain to me (or direct me via a link) to what the 6yr rule is?

Diane.

 

[Propertunity]

Please could someone explain to me (or direct me via a link) to what the 6yr rule is?

Sure Diane, even though you may rent out your PPOR, as long as you move back in within 6 years you can still claim full CGT exemption. See:
http://www.ato.gov.au/corporate/content.asp?doc=/content/86191.htm