Thanks for your comment.

If you’re planning to rent the property initially, it will need to be classified as an investment loan at the time of purchase. Tax deductions are available for the time the property was used to produce an income or is genuinely available for rent.

We recommend consulting an accountant or financial advisor to determine the classification and available tax deductions.

Thanks,
The BMT Team.

For the purchase is it classified as an investment and you have to pay the higher stamp duty rate? If the higher stamp duty is paid then presumably interest and the like would then be tax deductible? Does the duration of only 3 months letting come into play?

Thanks for your comment.

As you first rented the property after purchase then you will not be entitled to the full CGT exemption.

However, you could be eligible for a fifty per cent discount to CGT in the event of selling as you’ve owned the property for longer than twelve months.

For more information, visit:
https://www.ato.gov.au/individuals/capital-gains-tax/property-and-capital-gains-tax/your-main-residence-(home)/treating-former-home-as-main-residence/

Thanks,
The BMT Team.

Thanks for your comment.

The house will qualify as your PPOR after six consecutive months of occupation, as long as you don’t use or occupy another residence in that time.

As it had been rented for greater than 6 years there will be CGT implications though should be entitled to a partial main residence exemption.

Thanks,
The BMT Team.

Thanks for your comment.

You will be required to pay transfer duty (previously known as stamp duty) as per normal.
With the property being rented for that initial period before you make it your PPOR, there will be future CGT implications when the property is sold.

Thanks,
The BMT Team.

Thanks for your comment.

When you decide to make an investment property your principal place of residence, you need to notify the Australian Taxation Office.

It will mean that you no longer have to declare rental income and cannot claim any associated tax deductions.

Before doing anything you should consult your accountant to discuss any potential tax implications.

Thanks,
The BMT Team.

Thanks for your comment.

Once a property has been used to generate income, capital gains tax (CGT) will need to be calculated once the property has been sold. Properties owned for longer than twelve months are eligible for a 50 per cent discount on CGT.

There are partial exemptions available when a property was first your principal residence then used for generating income, which does in essence pro rata the time periods when calculating.

We recommend discussing this scenario with your accountant before making decisions.

We also recommend you get in touch with us to arrange a tax depreciation schedule on the income-producing property at the front of your block, if you don’t already have one.

Thanks,
The BMT Team.