Principal Place of Residence

Q: Can you have two principal places of residence in Australia?

You can only claim one principal place of residence anywhere in Australia at any given point in time. There are a few limited exceptions to this law that apply when land is: Owned by eligible trustees Used as a principal place of residence by an individual who is granted the right to reside on the land, under a will or a testamentary instrument. Used as a principal place of residence by a person with a life interest in the land.

Q: Can spouses have different principal places of residence?

For CGT (capital gains tax) purposes, only one PPOR can be registered to a couple, but it’s quite possible for situations to occur where spouses live in separate homes for a period of time. In such cases, spouses have two options: Select one home as the main residence of both spouses for the given period of time Each spouse can nominate a different home as their principal place of residence for the given period of time.

Q: Can I convert my PPOR to an investment property?

Yes, you can convert your PPOR to an investment property, but there is no right answer when it comes to the question of if you should . There are both tax and financial implications to consider before you take the plunge. One of the biggest considerations should be the future potential for capital growth of your investment. If your property has experienced a considerable increase in value within the last five years, you may not have much more growth to be seen in the short term. Your PPOR could also not have a rental appeal. For example, if your house has two bedrooms in a locality where four bedrooms are in demand, it may not have growth potential or demand as an investment option.

Published 10 June 2022Updated 24th February 2023

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Principal Place of Residence

What is a PPOR (Principal Place of Residence)?

Your primary residence is also known as your principal place of residence, or simply, the place you call home. If you have a home, condo, townhome or apartment that is your main-stay place of living (and you can prove it), this would be generally considered your principal place of residence.

According to the Australian Taxation Office (ATO), a principal place of residence should legally meet the following requirements:

You and your family live there
Your personal belongings are at the residence
Your mail is delivered to the address of the residence
The address is registered in the electoral roll
Utilities such as gas and power are connected at the residence

In Australia, most home-owners live in the house that they own; they also own just the sole property. For those that have additional properties they manage as investments, tax matters can become more complicated.

Statistics from the ATO reveal there are more than 2 million property investors in Australia (meaning that an estimated 20% of homeowners also have an investment property).

FAQs about Principal Place of Residence

Can you have two principal places of residence in Australia?

You can only claim one principal place of residence anywhere in Australia at any given point in time. There are a few limited exceptions to this law that apply when land is:

Owned by eligible trustees
Used as a principal place of residence by an individual who is granted the right to reside on the land, under a will or a testamentary instrument.
Used as a principal place of residence by a person with a life interest in the land.

Can spouses have different principal places of residence?

For CGT (capital gains tax) purposes, only one PPOR can be registered to a couple, but it’s quite possible for situations to occur where spouses live in separate homes for a period of time.

In such cases, spouses have two options:

Select one home as the main residence of both spouses for the given period of time
Each spouse can nominate a different home as their principal place of residence for the given period of time.

Can I convert my PPOR to an investment property?

Yes, you can convert your PPOR to an investment property, but there is no right answer when it comes to the question of if you should. There are both tax and financial implications to consider before you take the plunge.

One of the biggest considerations should be the future potential for capital growth of your investment.

If your property has experienced a considerable increase in value within the last five years, you may not have much more growth to be seen in the short term.

Your PPOR could also not have a rental appeal. For example, if your house has two bedrooms in a locality where four bedrooms are in demand, it may not have growth potential or demand as an investment option.

What is the significance of the principal place of residence during taxation?

Your principal place of residence can qualify for income tax benefits and a lower mortgage rate. What this means is that you could receive a reduction in the amount of mortgage interest paid, or exclusion of profits from capital gains tax if you decide to sell the residence.

If you receive profits from your principal place of residence either by selling (called a capital gain) or renting it out, you need to declare this with the ATO. However, selling your PPOR will exempt you from paying a capital gains tax.

To have the sale of a PPOR exempted from capital gains tax, you must meet the following criteria:

Be an Australian citizen
The residence has been your home, your partner’s home, or that of other dependents during your time of ownership.
The residence has not been used to generate income, meaning that you have not run a business from it, rented it, or flipped it (renovated for sale).

Keep in mind that if you sell a property that is not your principal place of residence, and you make a profit, it is mandatory to declare this with the ATO.

Disclaimer: The information provided on this blog is for general informational purposes only. All information is provided in good faith; however, we do not account for specific situations, facts or circumstances. As such, we make no representation or warranty of any kind whatsoever, express or implied, regarding the accuracy, adequacy, validity, reliability, availability or completeness of any information presented.

This blog may also contain links to other sites or content belonging to or originating from third parties. We do not investigate or monitor such external links for accuracy, adequacy, validity, reliability, availability or completeness, and therefore, we shall not be liable and/or held responsible for any information contained therein.

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Principal Place of Residence

What is a PPOR (Principal Place of Residence)?

FAQs about Principal Place of Residence

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