What happens when you move into your investment property
Many investors eventually move into their investment property — whether temporarily, to renovate, or permanently. The tax consequences are significant and depend on whether you intend to rent it out again or keep it as your home.
From the date you move in
Deductions stop. From the date the property becomes your main residence, you can no longer claim any investment property deductions — including depreciation, interest, rates, or management fees. Deductions must be apportioned for the year of change.
CGT: your cost base is set at the date of change
When you eventually sell the property, CGT applies to the growth in value during the period it was an investment property. The ATO uses the market value of the property at the date you first rented it out (or at the date you moved in if the property was initially your home and then an investment).
Your quantity surveyor's depreciation schedule is important here because:
- Division 43 deductions you claimed reduce your cost base
- Division 40 assets that were written off create different CGT considerations
The 6-year absence rule
If you move out of your main residence and rent it out (rather than moving into an investment property), the 6-year rule may apply. Under this rule, you can treat the property as your main residence for up to 6 years while renting it out, which means:
- No CGT for up to 6 years
- But you can still claim rental deductions (including depreciation) during that period
What if you want to move back out and rent it again?
You can do this. The property will become an investment property again from the date you move out and make it available for rent. Deductions resume from that date, and you will need to assess the CGT implications of the dual-use period.