Hi everyone,
I was just wondering what to do in my current circumstance.
I bought my first house in August and plan to rent it out once I have lived in it for a full year. The plan was originally to rent a property owned by my parents and houseshare with a few friends (ignore the fact that housesharing with friends may not be the best idea). However my parents' accountant has advised against this (already has land tax issues and purchase via trusts would not be of any benefit to them). The original idea behind renting off my parents (at market value) was to allow me to increase my borrowing capacity through rental income and to give me security (not having to move for 6 years during the 6 year CGT exemption period on my PPOR). I have never rented so have no rental history and I have two cats. The friend who has expressed an interest in living with me also owns a cat and a dog. Somewhat a zoo scenario which would make it difficult to find a rental property. I realise I am not obligated to houseshare specifically with her, but stability of living arrangements for 6 years and not having to deal with house inspections etc is something I am hoping to achieve.
I am now considering just buying a second place (lesser value than the first) and moving into that and claiming the rental income from friends and proportionate deductions - don't want to lose my CGT exemption on my current PPOR by incurring income in it while I live in it.
Question is, if I did own 2 houses and I only lived in my original PPOR for a year and lived in the 2nd house (the one generating rental income) for say 6 years, am I able to elect the first PPOR as my PPOR, or does the fact that I lived in the 2nd house for more time require me to elect it as my PPOR (which obviously I wouldn't want to do because it would not be 100% CGT exempt like the original property because of the income).
I figured someone on here would be able to point me in the right direction re tax consequences of PPOR ownership where multiple potential PPORs exist.
Thanks.
B
I was just wondering what to do in my current circumstance.
I bought my first house in August and plan to rent it out once I have lived in it for a full year. The plan was originally to rent a property owned by my parents and houseshare with a few friends (ignore the fact that housesharing with friends may not be the best idea). However my parents' accountant has advised against this (already has land tax issues and purchase via trusts would not be of any benefit to them). The original idea behind renting off my parents (at market value) was to allow me to increase my borrowing capacity through rental income and to give me security (not having to move for 6 years during the 6 year CGT exemption period on my PPOR). I have never rented so have no rental history and I have two cats. The friend who has expressed an interest in living with me also owns a cat and a dog. Somewhat a zoo scenario which would make it difficult to find a rental property. I realise I am not obligated to houseshare specifically with her, but stability of living arrangements for 6 years and not having to deal with house inspections etc is something I am hoping to achieve.
I am now considering just buying a second place (lesser value than the first) and moving into that and claiming the rental income from friends and proportionate deductions - don't want to lose my CGT exemption on my current PPOR by incurring income in it while I live in it.
Question is, if I did own 2 houses and I only lived in my original PPOR for a year and lived in the 2nd house (the one generating rental income) for say 6 years, am I able to elect the first PPOR as my PPOR, or does the fact that I lived in the 2nd house for more time require me to elect it as my PPOR (which obviously I wouldn't want to do because it would not be 100% CGT exempt like the original property because of the income).
I figured someone on here would be able to point me in the right direction re tax consequences of PPOR ownership where multiple potential PPORs exist.
Thanks.
B