We bought a property using an owner-occupied loan and initially planned to move in immediately, but we've decided to wait until next year. What are the tax implications if we rent it out for a short period, less than a year? What is the best course of action to save the most money in the long run?
You haven’t mentioned if you own any other houses / properties?
Assuming you don’t, then the implication of renting out a property before you move in, is that when you sell that property in the future, you’ll end up paying capital gains tax for the time you rented it out.
The only way to avoid that is to move into the property and to establish it as your main residence. After this, you can move out for short periods of time and potentially be exempt from CGT using the 6 year rule. Again, this is dependent on you not owning other houses.
You haven’t mentioned if you own any other houses / properties?
Assuming you don’t, then the implication of renting out a property before you move in, is that when you sell that property in the future, you’ll end up paying capital gains tax for the time you rented it out.
The only way to avoid that is to move into the property and to establish it as your main residence. After this, you can move out for short periods of time and potentially be exempt from CGT using the 6 year rule. Again, this is dependent on you not owning other houses.
Thank you for your response. We do not own any other properties. So say we earn $20K from renting it out for 6 months and then sell the house in 10 years, will we have to pay $10K in Capital Gains Tax? Is that correct?
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