If you are living in your home and you need to move out, then you will have the option of treating this home as your main residence for another six years.
This is a common situation where you need to move away for work and you continue to own the home.
Best of both worlds…
You can have a situation where you rent your old home out and get the negative gearing tax benefits and also be free from capital gains tax. Not often in the world you get to eat the cake as well.
What’s the catch?
You can only have 1 residence at a time (limited exceptions apply). This means if you purchased a new home you will need to decide which one is considered your main residence. The good news is that you can make this decision when you sell either property so you can work out what provides the best tax result.
- If you leave the home vacant and not producing income then you can treat this property as your main residence indefinitely.
- The six year exemption can apply to the same property numerous times over your ownership period.
- You must live in the property before this choice becomes available.
- First home buyers- qualify for the relevant first home buyer concessions and once you have done that move back with the parents and rent out the house. You will have the tenant and ATO helping pay off your home and not pay any capital gains tax when you sell the property (good in theory but could you move back in with your parents?)
Author: Jessica Russell