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CarHuiz(Newbie)Newbie
4 June 2024

I've done some research and also spoken to my accountant regarding the 6-year rule and how it is applied especially when there is a break in rental


I have a property that i began renting out in August 2016 - After 2 tenants...the last one being removed via bailiff on the 10/02/2021. After this i moved back into the property (i was working in Perth but family was living south) to fix and clean it up, the bills also were also in my name. I managed to get it rented out early April. Does the 6 years start again - there is not definitions around time limit of moving back in. See below snip-it from ATO website.


If you're absent more than once when owning the property, the 6-year period applies to each period of absence. A period of absence stops when you either stop renting your home and:

  • move back in
  • leave it vacant

Thanks

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Taxduck(Taxicorn)Taxicorn
4 June 2024

You only need to be able to show that you moved back and it was your main residence to restart the 6 years. See "what is a main residence"

https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/property-and-capital-gains-tax/your-main-residence-home/eligibility-for-main-residence-exemption#ato-Whatisamainresidence


CarHuiz(Newbie)Newbie
5 June 2024

Thankyou.


The scenario is. Property was purchased in October 2014 ($380K) and lived in until it was rented out through agency in September 2016. Property was moved back in temporarily to fix it up in January 2021 and in April 2021 and agreement was made with family to 'sell' the property to them but only when they could obtain their own finance in a couple of years. An agreement was put together with purchase price based on valuation from real estate etc. and from there they continued to pay rent on the property under an agreement as I still held the property as owner with the bills in my name still, and they are now in the process of obtaining their own finance to take over the property. The broker and conveyancer are using the price that was agreed on in April 2021 ($385k) to work out their stamp duty etc.

Would I detail the sale (CGT) in my next return with that same sale price agreed in 2021 even though today's market value will be higher ($550K)?

I know i could claim the main residence exemption, but the other concern is I had purchased another property within that period in Jan 2020 and don't want to be up for any CGT down the road if I use the other property sold to family as my main residence for that full period. Also, I have still put down this rent as income on my return for the past few years and believe that is correct.

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