Just bought a unit - should I live in it first?

Hi all

I'm trying to work out whether I should move into the unit I just bought (settlement's in 2 weeks) so that I can treat it as my main residence, or whether I should try to find a tenant straight away.

It's a 2-bed unit in South Perth which I bought for $420k. I've got an interest-only loan for 80%, but I'll deposit enough in the offset account to ensure I'm not paying any interest (until I withdraw the funds for another investment). I don't own any other property (recently sold), and at the moment I'm staying nearly rent-free at my mum's place. Apart from a coat of paint and new light fittings I probably won't be doing any renovating.

Does anyone know how long I have to live in a place for the ATO to consider it a main residence? Would 3 months be enough?

Are there any benefits to living there first, apart from saving on capital gains tax for the period it's treated as a main residence? I could start hunting for a tenant during that time so there's one lined up for when I move out.

Thanks for your help. This is my first investment property!

 

K_veg

I believe the minimum period to qualify for the 6 year CGT exemption is 6 months
Check it out.
Here is the link to the ato page
Moving on? Remember the six year rule for CGT

 

Thanks for the link. So here the ATO gives 6 months as an example, so that would definitely be enough time. Just wondering if a shorter time would also be okay or if this is the minimum?

Half a year's rent is quite a bit to lose out on, so I'll have to think about it carefully!

 

Actually the ATO's position is to disallow any claim which is purposely designed to avoid paying your fair share of taxes. Tax minimisation is allowed but tax avoidance is not and often there is a fine line between the 2.

You could live in it for 1 month if you like but you need to have a very valid and solid reason for moving out and still claiming the PPOR exemption.

What's the worse that can happen?
They'll disallow your claim and you'll pay CGT

 

Fair enough. I'm basically in transition waiting for my partner to move here from interstate. So when he moves over I'd probably move out and we would find a place to live together - that's probably a legitimate reason.

Thanks for your response!

 

Sounds very legit to me
Leave essential services (electricity, gas water etc) in your name for as long as possible and keep them as proof