Are you living in your investment property and wondering how the taxes might work? With the property market going through a good period after recovering from the Covid crisis, many people have become stable enough to rent out their homes and move somewhere else, thereby converting their homes into investment properties.

But, there’s still a large ratio of population hit by the economic turmoil that is converting their rental properties into their main place of residence to save money. If you are also going through an economic crisis and considering living in your own investment property, here’s a brief tax guide you should know about:

Can I live in my investment property?

Yes, obviously, but you need to keep clear records of the date you moved in and other record slips, so you can accurately show them up at the end of the year tax time to the Australian Taxation Office. To save as much as you can in your tax returns, we recommend obtaining a valuation of the property at the time you are moving in. This will help mitigate the tax implications while selling it.

What about claiming capital gains tax (CGT) exemptions?

CGT exemptions may be available for the time you reside in your investment property. However, they will vary greatly depending on a number of factors, such as how long you have been using or how long you want to use that investment property as your main residence.

What happens if I rent out a portion of my investment property?

You might be eligible for some tax deductions if you consider renting out a room or master suite in your investment property. As per the norms set by the Australian Taxation Office, the ratio of the floor space you rent versus the amount of total floor space you have claimed for personal use decides the number or amount of tax deductions you are eligible to claim.

Get in touch with a professional tax accountant today!

When it comes to tax implications, it can be very difficult to determine the right tax complexities of moving into an investment home. Regardless of whether you intend to live in the property permanently or are just looking for a temporary stay while you manage your finances, the tax implications can be more severe than you had anticipated.

If you are worried about managing your taxes or filing tax returns while living in an investment property, consider talking to one of our qualified tax professionals at KPG Taxation to help you negotiate the financial complications and maximise your tax savings. For more information, schedule a consultation today.