Which Property To Nominate as PPOR?

[schmick]

Hi Everybody,

I am seeking some advice in regards to which property we should be claiming our PPOR excemption on.

We have a property in Brisbane (House / Outer Suburbs) that is currently being claimed as our PPOR but is currently an IP due to relocation to Melbourne. We lived in this property for one year (2006/07) in order to qualify for the FHOG.

We are in the process of purchasing a property here in Melbourne which we intend to live in and which at some point may also become an IP. The property is an apartment and located in North Melbourne.

I'm thinking that as part of our risk management strategy whilst interest rates are rising and uncertainty still remains around the state of the economy that we do not claim the PPOR excemption on our new Melbourne purchase even though we will be living in it.

Reason being is that we have no intention of moving back to Brisbane or selling but if circumstances arose whereby we would need to sell one of the properties, the Brisbane property would be the one to be sold. Am I correct in my logic in that because we haven't claimed our Melbourne property as our PPOR the Brisbane property would not be subject to CGT as long as we sold within six years of it becoming an IP?

What would be the implications on the Melbourne property for us if we don't nominate it as our PPOR? Can it be nominated as our PPOR at a later date?

What are peoples thoughts on this as a fallback strategy? We are still in the accumulation phase and thought it be wise to have an exit strategy in place if required.

Feedback and Thoughts appreciated.

Thanks...

 

[schmick]

FYI, in regards to Land Tax, Values for the North Melbourne property as follows:

NAV = $21,250
Site Value = $134,000
Capital Improved Value = $425,000

Understand land tax isn't payable in Victoria for holdings < $250,000 so assuming calculated on NAV or Site Value we wouldn't be liable?

 

[Propertunity]

I attended a semiar last week run by the ATO on investment properties / tax implications etc.

They advised:
1. You can nominate whichever property you like as your PPOR to the ATO for CGT purposes when you sell. You can choose the most tax effective property for doing so to minimise your CGT (as long as you have abided by the rules concerning PPORs - 6 year rules etc).
2. You can nominate whichever property you like as your PPOR to the OSR (in your state) for Land Tax purposes each year.

The nomination of a PPOR to the OSR does not have to be the same property that you nominate to the ATO as your PPOR as they are 2 different things covered by 2 different legislative regimes.

 

[DavidMc]

That's interesting. I thought you'd have to nominate the PPOR as the place you actually reside in.

 

[Propertunity]

That's interesting. I thought you'd have to nominate the PPOR as the place you actually reside in.

If you are paying land tax - then for the purpose of registering a PPOR on an annual basis with the OSR - then Yes - it is the place you lived in. (at 31 Dec I think (??)).

However, if you are selling one of many properties that you own and have lived in at various times over the years, then for CGT purposes you can nominate one to be your PPOR (as long as it complies with the ATO rules - i.e. you lived in it, then you rented it out for 5 years, then you moved back into it for 6 months, then you rented it out for 2 more years etc etc. This property you could nominate for your PPOR for CGT purposes even though for OSR purposes you may have nominated a different property/s over the years as your PPOR)

 

[jrc]

If you keep Bris as your PPOR, then your cost base on Melbourne while it is non ibcome producing can be increased by your interest, insurance, rates and maintenance taht you are paying for Melbourne