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Converting an Investment property to the principal residence

Discussion in 'Real Estate' started by Jmitch, 14th Aug, 2011.

  1. Jmitch

    Jmitch New Member

    Joined:
    14th Aug, 2011
    Posts:
    1
    Location:
    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. Terryw

    Terryw Well-Known Member

    Joined:
    9th Jun, 2006
    Posts:
    653
    Location:
    Sydney
    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

    Joined:
    15th Jun, 2011
    Posts:
    23
    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

    Joined:
    2nd Jun, 2012
    Posts:
    2
    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.