PPOR for CGT purposes

Hi all.

If I am renting a house that I purchase, can I claim the place as my PPOR from the time I moved in?.

I am looking at buying the place that I rent (we have agreed a price), but I am thinking of is doing a renovation whilst renting and then sell after I have bought it. I have been there a year and so can I claim this place as my PPOR for the year and therefore not pay CGT when I sell (I would "own it" for about 3 months)?.

Any help would be appreciated.

Hi Noddy,

As long as you continue to live in the home the PPOR exemption will apply when you eventually sell. There is no minimum time period that the home needs to be your PPOR to claim the exemption.

However beware that the exemption won't save you from having to pay tax on the profit from the sale, if the property was purchased with a "profit-making intention". In this case the profit would be included in your assessable income as ordinary income (notwithstanding that it would be otherwise exempt under the CGT provisions if treated as a capital gain.

The ATO may take the view that the timing of the renovations and immediate sale may point to a presumption that you had a profit-making purpose when you acquired the property. To rebut this presumption and avoid being taxed you will need to prove otherwise.
Hi Richard,

Thanks for the reply.

Would that apply if I purchased on a 24 month settlement (similiar to a WRAP) and did the reno's over the two years?. Technically my contract date would be today and I would have the place as my PPOR for 2 years.