Lodger and 6 Year Rule

[DanMunchie]

Hi all,

Same house as my other thread (http://www.somersoft.com/forums/showthread.php?p=802320), but is a separate issue so I thought I would start a new thread.

I was wondering how the 6 year rule applies when dealing with a house that has been used for a lodger (where the income and deductions are claimed).

If I were to go overseas for a few years and rent out the entire appartment, would having a lodger immediately before I leave remove my ability to use the 6 year rule for CGT exemption for the period I am gone?

From http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s118.190.html

(3) However, you ignore any use of the * dwelling for the * purpose of producing assessable income during any period that you continue to treat it as your main residence under section 118-145 (about absences) to the extent that any part of it was not used for that purpose just before it last ceased to be your main residence.

What does "last ceased" mean?

 

[jaycee]

Hi all,

Same house as my other thread (http://www.somersoft.com/forums/showthread.php?p=802320), but is a separate issue so I thought I would start a new thread.

I was wondering how the 6 year rule applies when dealing with a house that has been used for a lodger (where the income and deductions are claimed).

If I were to go overseas for a few years and rent out the entire appartment, would having a lodger immediately before I leave remove my ability to use the 6 year rule for CGT exemption for the period I am gone?

From http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s118.190.html



What does "last ceased" mean?

What is the defintion of a " lodger " ?

 

[Mry]

What does "last ceased" mean?

It means when you moved out, as in you physically do not use it as your main residence. An important distinction when discussing the leave of absence rule.

 

[coastymike]

Sounds like your accountant has a lot of interesting issues to consider

 

[Rob G.]

You will get up to 6 years **PARTIAL** exemption.

Work out the percentage of the house exclusively used by the lodger prior to you vacating, plus the percentage of common area that partially lost the main residence exemption.

The rest is your exempt main residence at that time.

Similar rules apply where you partly used your home as a place of business before vacating.

If the house is let as a commercial premises while absent, then you get zero exemption since it could not be deemed to be your main residence when actually it is not a residence at all.

Chat to your Accountant about how to work out the exempt portion ... usually by a percentage of habitable floor area.

Cheers,

Rob

 

[DanMunchie]

Quote:
Originally Posted by jaycee
What is the defintion of a " lodger " ?

"A Lodger is a person who stays at another person’s place and pays rent but is generally not supplied meals. Lodgers are a special group of home dwellers in terms of the law. Unlike most who rent, they are not covered by the Residential Tenancy Act 1987. A lodger does not have exclusive occupation and the owner retains control of the premises at all times."

I need a lodger as opposed to a tenant due to the exclusive possession requirement of the Transfer Duty Exemption (cannot transfer, lease or otherwise grant exclusive possession of part or all of the property). A lodger has no exclusive possession and is on a licence not a lease.



And thanks Rob, I has assumed this was the case.

If I have no lodger for one day/week/month BEFORE I leave, does that make 100% of the house CGT exempt for up to 6 years? Seems petty to have to ask them to move out for a week...