Converting an Investment property to the principal residence

Discussion in 'Investment Strategy' started by Jmitch, 14th Aug, 2011.

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  1. Jmitch

    Jmitch New Member

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    1st Jul, 2015
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    Melbourne
    Does anyone know the tax implications of moving into a property bougth as an investment and moving into as the principal residence. We have had the property for 5 years.
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Your deductions would cease once the property is not available for rent. it would also, generally, be CGT free once it has become you main residence.
     
  3. vanessa__

    vanessa__ V J Tait & Associates

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    1st Jul, 2015
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    Location:
    West Pennant Hills, Sydney, NSW
    Hi,

    Apart from all of your tax benefits obviously stopping you need to check regarding CGT and how it affects you. It will depend on how long you end up living the property if you sell it on you must hold it as a PPOR for a certain period of time before selling. You should also check that you loan is not an investment loan as if it is you will need to notify your bank and convert that loan to a residential loan.

    I would speak with your accountant to ascertain the exact effects to you.
     
  4. gemsyd

    gemsyd New Member

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    1st Jul, 2015
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    Location:
    Sydney, NSW
    If you lived in the property before you rented it out, then subsequently rent it out, you are allowed to let it out for 6 years, otherwise CGT must be paid proportionately for the time rented out.

    If you never lived in the property and rented it out from the outset, then CGT must be paid when you sell the property, proportional to the time it was rented out.

    You should notify the bank of the change in status, but it should not affect the rate, as investment and residential interest rates are usually the same.
     

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