If I purchase a property which settles in 1 month but still has a tenant in it with a lease that ends 2 months after settlement, I will be a landlord for 2 months. As I understand it this means I have to treat the property as an investment property for 2 months. Therefore I have to go through all the mess of dealing with things like (need confirmation of these from an accountant):
- declare all rental income
- record and claim all expenses for things like agent fees, council rates, water and sewerage supply, loan interest rates, any maintenance, insurance.
- claim proportion of expenses for bank charges, loan costs, purchase costs.
- record ALL capital expenses I make on the home over the lifetime I own it so it can be added to the cost base for CGT calcs.
- remember or ask my inheritors to remember that the property was an investment property for the first 2 months when they come to sell it after I die.
- pay an accountant to help with all this because it is beyond my knowledge.
- plus whatever else I've missed out on.
If the above's not enough, the remaining 2 month rental term also crosses over 2 financial years, so that's 2 complicated tax returns! YAY!
And what's the likely end financial result? Probably zero net income, more likely a loss (ie less income to the ATO). Probably zero/negligible CGT. One very frustrated home owner.
Why does the ATO expect us to jump through all the above hoops for such a short tenancy in a situation that's VERY common and often unavoidable? Just do a quick search of how often this topic comes up.
Why not provide a grace period like 6 months. The ATO provides a grace period when changing homes (eg buying a new home before selling your current home). Why not in this instance??
The only response I've seen is "buy a house that isn't tenanted". What a joke!
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