CGT event when purchase primary resident but it's tenanted

Question

RachATO · Accepted Answer

Oooh. Exciting times! If the home is rented out when you take ownership, it can't be treated as your main residence until you move in. This means you'd be liable for CGT from the time of possession (the date you sign the contract for acquisition) until moving in. So it's really important to keep certain records to help with your tax affairs. If youre an Australian resident, you may be entitled to a partial exemption which factors in the days the property wasn't your main residence after acquiring it. The CGT exemption tool will work out the percentage of your capital gain exempt from CGT. In your scenario, if you moved in for a year, then moved out and used it as a rental property again, you can keep treating it as your main residence for up to 6 years as long as you don't own another main residence. If it stays a rental property for more than 6 years, it'll be subject to CGT. If you want to avoid CGT liabilities, it's better to buy a property that isn't currently tenanted when you buy. But CGT might still arise depending how long it's used as an investment property down the track. Good luck with the house hunt :)

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