What are the tax implications of living in your own investment property?

couch with pillows inside an investment property

What are the tax implications of living in your own investment property?

What are the tax implications of living in your own investment property?

The past year or so has been turbulent for the property market. In June 2020, The Australian Prudential and Regulation Authority found that $40 billion worth of loans were overdue or defaulted thanks to the economic fallout of the COVID-19 pandemic.

Fortunately, house prices have strengthened in 2021, and the property market looks set for a healthy recovery. As we move towards the latter half of the year, the outlook for real estate investors and property developers is increasingly positive.

Interestingly, the changing fortunes of the property market have prompted many people to consider converting their homes into investment properties. Many middle-class Australians have actually saved money during the pandemic and are financially stable enough to move elsewhere and rent out their homes.

At the same time, however, many investors hit by the economic turmoil of the past year are converting rental properties into their main places of residence to save money and protect themselves from future crises. So, if you’re considering living in your own investment property, we’ve put together a quick guide on the tax implications of such a decision.


Can I live in my investment property?

Yes, you can certainly move into your investment property, however, it is important that you keep clear records of the date you moved in, so that you can accurately advise the Australian Taxation Office in your tax return at the end of the year.

We also recommend obtaining a valuation of the property at that time. This will help to mitigate tax implications when the time comes to sell your property.

For more information about moving into your investment property, our experienced professionals are here to help.


Can I claim capital gains tax (CGT) exemptions?

It may be possible to claim CGT exemptions for the period that you live in your investment property. However, this will depend on a variety of factors, including the length of time you use the property as your main residence.


What if I rent out part of my property?

You may wish to rent out a room or suite in your investment property. If this is the case, you may be able to claim some tax deductions. 

According to the Australian Tax Office, the amount of relief you can claim depends on how much floor space you rent out in proportion to the floor space you have claimed for personal use.


Get in touch with a professional today

Working out the tax implications of moving into an investment property can be very complicated. Whether you’re hoping to move into the property for good or live in it while you get your financial affairs in order, the tax implications may be harsher than you had expected. 

To help you navigate the financial waters of the property market and maximise your tax reductions, we recommend speaking to a financial professional. At Simmons Livingstone, our friendly accountants are here to help you make the most of your money and your livelihood. Get in touch today to find out more.


If you liked this article, you might also like the Benefits of investing in residential property.

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