Primary residence status - how long do I have to live in it?

Hi. I have a property I haven't lived in for seven years now. It has a large capital gain and I don't plan to sell for another ten to twenty years. As I have rented since leaving it I would like to keep this property as my primary residence for tax purposes so that when the time comes I won't have to pay a lot of CGT. I am aware of the time periods involved and that my long absence means it is no longer my primary residence. I am prepared to move back into it for a few months to re-establish the PR status for another six years.

Does anyone know how long would be long enough to get all the bills in my name etc, live there and re-establish the PR status. (I would prefer just 3 months so I can get it rented again.)
 
The ATO has a reasonable description of the tests here. To answer / not answer your question, it is a question of fact rather than time.

https://www.ato.gov.au/General/Capi...-estate/Is-the-dwelling-your-main-residence-/

What factors apply?

The following factors may be relevant in working out whether a dwelling is your main residence:

the length of time you live there ? there is no minimum time a person has to live in a home before it is considered to be their main residence
whether your family lives there
whether you have moved your personal belongings into the home
the address to which your mail is delivered
your address on the electoral roll
the connection of services (for example, phone, gas or electricity)
your intention in occupying the dwelling.

The only time is an issue is if it was just constructed, and you have to live there for at least 3 months to get the concession. I believe some people take that to mean that 3 months is the time period overall which is incorrect.

I would take this with a grain of salt, but 20 years ago at university, the lecturer remarked that there was a case where someone met the conditions of a place of residence for only a week of residing there.

If someone were to say to you "Oh, you only need to live there for 3 months to get the exemption", that would be a load of rubbish, even though that is the answer we wish we could get.
 
Thanks Mry.

It's all pretty unspecified. I think if I move in, get everything connected in my name and change my address on the electoral role they won't have much to complain about. If there are no specific rules I can't see how I can be breaking them. The whole PR thing seems to work on the principle that if you claim one you can't claim another so the proof of a PR is not seen as pivotal.

Would love to hear of any actual dealings with the ATO over such a claim???
 
Hi. I have a property I haven't lived in for seven years now.

...

I am prepared to move back into it for a few months to re-establish the PR status for another six years.

If you have not moved back in within the 6 year exemption, then how do you plan to re-utilise? Its been 7 years.
 
Hi. I have a property I haven't lived in for seven years now. It has a large capital gain and I don't plan to sell for another ten to twenty years. As I have rented since leaving it I would like to keep this property as my primary residence for tax purposes so that when the time comes I won't have to pay a lot of CGT. I am aware of the time periods involved and that my long absence means it is no longer my primary residence. I am prepared to move back into it for a few months to re-establish the PR status for another six years.

Does anyone know how long would be long enough to get all the bills in my name etc, live there and re-establish the PR status. (I would prefer just 3 months so I can get it rented again.)

OK so you musnt have a current main residence then. If you do when you move back out of the proposed residence and back to your current residence the MRE would cease. The 6 year absence rule has an important catch. You cant reside in another property you own (or a spouse, partner etc) or that property then reverts to your main residence.

1. You can only have one Main Residence at any time;
2. It is fact based;
3. The 6 year rule only works if you own a property and move out and don't live in a property you or a spouse own.

Also give thought to the impact of land tax.
 
sorry to hi jack but my question might also be relevant to this question
I am just about to finish a duplex
we would be looking at moving into 1 side of the duplex
if we moved into this duplex and had this as our ppor if we decided to sell at the end of the year and have only lived in for 5 months but had water electricity etc in our name change licence address over etc legitimately lived in for 5 mths then sold would we be able to escape gst and cgt as it was our ppor
thanks in advance
 
Just to point out Paul, he said

As I have rented since leaving it I would like to keep this property as my primary residence

so the one residence rule doesn't apply here, though it is worth noting as a caveat.

G.Field, too many issues to cover there. It depends on your treatment of the properties during the development phase, what you intend to do with the other unit, if you have a current main residence right now, etc. I would also recommend you have a look at a topic called "New Residential Premises" as that will have a large impact on your plans.
 
we are currently in the process of selling our ppor we currently live in in qld finish duplex in sydney and move into 1 side and rent out the other side out
if we sold 1 and kept the other a rental long term
the original plan was to keep both and rent out for the long term
then plan changed to sell both then changed again (sorry)
now new plan was to move into 1 keep the other as a long term rental say 5 years
but sell 1 the one we made ppor at the end of the year to capitilise on the Sydney market
then maybe rent in the area

I know we should have had our plan right from the start
but circumstances change

I want to know where I stand as my accountant thinks there will be no issues if we claim it as our ppor move into it and then if we did decide to sell at xmas we would be able to skip the gst and cgt
as this will be a very costly decision I want to make sure I have the right info
ta
 
Just to point out Paul, he said



so the one residence rule doesn't apply here, though it is worth noting as a caveat.

Agree but it doesn't actually say that he doesn't have another exempt residence. I have seen people who think you can have multiple MREs as long as you satisfy the six years on each.
 
Agree but it doesn't actually say that he doesn't have another exempt residence. I have seen people who think you can have multiple MREs as long as you satisfy the six years on each.

Good point. My first boss when I started accounting believed that if you move into a rental property just before sale, the entire thing was capital gains tax free. Lots of misconceptions out there.
 
Thanks for the interest. I have no other residence to claim as a primary over the past 7 years. Plan after moving back in for a few months would be to rent it out again and go to live in a rented place again. Bottom line is I bought this place in 2006 and I want it to be my primary residence until I sell it in 10 years or so. Even if I buy a new place and live in it I won't want to claim it as my primary.
 
To make the situation clearer, the house I own is in Canberra and I live in Qld. That's why I rent - because I don't want to buy in Qld but I do like living here :)
 
Question is: what are the exact steps I need to take to re-establish I home I haven't lived in for seven years as my primary residence? From answers so far it seems there is no such set of steps are encoded in tax legislation.
 
Question is: what are the exact steps I need to take to re-establish I home I haven't lived in for seven years as my primary residence? From answers so far it seems there is no such set of steps are encoded in tax legislation.

Legislation doesn't define "main residence". So the term would take its ordinary meaning. In the old tax act the term used to be "principal place of residence" and there is ATO publication giving guidance on what this means. it might also be useful to look at legal some cases on the topic.

The steps are
1. Move in
2. start living there!
 
To make the situation clearer, the house I own is in Canberra and I live in Qld. That's why I rent - because I don't want to buy in Qld but I do like living here :)

If you stay in your job you will have a hard time convincing the ATO that you are genuinely residing in Canberra as a PPOR. taking a few weeks or months holiday will not establish a genuine case if scrutiny is applied.

You will have a much better chance if you get a job in Canberra.
Marg
 
I have a question,
I was wondering if Shanty's been leasing out the home for 7yrs, cause its been income producing for 7 yrs if he were to sell now/or later he would have to pay CGT for those 7 yrs right? Not just 1 yr (6yrs exempt and 1 yr assessable - this is not correct I think?)

Also if he had just leased it out for 6 yrs and then left it vacant to not produce income from it for the last yr, it would be CGT exempt for the whole 7yrs? (as you are allowed to leave your home vacant -not producing income, indefinatley and still have it be your PPOR if you don't own any other property)?

Would that be correct or have I confused myself?
 
If over 7 years it would be apportioned.

If absent for more than 6 and it is not income producing then the main residence exemption could possibly be still maintained.
 
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