Six year rule

Discussion in 'Real Estate' started by MiddleClassMonkey, 9th Aug, 2007.

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  1. MiddleClassMonkey

    MiddleClassMonkey Well-Known Member

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    Sydney, NSW
    Hello

    In regards to the six year rule where you can rent your PPOR out and not suffer CGT when selling, is there a particular form or notice you need to submit to the ATO or can you officially begin the 6-year period renting out at your leisure (provided you have lived in the residence as PPOR for min. 12 months)?

    Thanks

    - MCM
     
    MiddleClassMonkey, 9th Aug, 2007
    #1
  2. Simon

    Simon Well-Known Member

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    I don't believe there is a 12 month qualifying period.

    When it is time to put in your tax return you just declare all income and claim expenses. Simple as that.

    When you do sell then you have to calculate any CGT owing and this return may be audited. This is the major check the ATO does. Though I hear they do some data matching of property sales to work out who gets audited.

    Cheers,
     
    Simon, 9th Aug, 2007
    #2
  3. MattR

    MattR Well-Known Member

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    You make that election and keep it with your records.
     
    MattR, 9th Aug, 2007
    #3
  4. MiddleClassMonkey

    MiddleClassMonkey Well-Known Member

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    OK, that's simple enough, thanks guys
     
    MiddleClassMonkey, 9th Aug, 2007
    #4
  5. Mark Laszczuk

    Mark Laszczuk Well-Known Member

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    Brisbane
    MCM,

    Keep in mind that you can only have one PPOR at any given time. So if you buy a house, claim as PPOR (even though you don't live there), sell it CGT free. Meanwhile, you've been living in another house, which for whatever reason you are forced to or choose to sell later. Bingo bango, you pay CGT on the six years (or however long) you were claiming the CGT concession on the other house.

    So it's not a simple black & white decision. It *may* come back to bite you in the future, so keep that in mind.

    Mark
     
    Mark Laszczuk, 9th Aug, 2007
    #5