Hello, every body. I am a new property investor.I like to get somebody help. I and husband currently live on our 1st home which have large space for child . We are looking for 2nd property at moment then rent it next 15 years. Then we plan to move in the 2nd property when our child move out. If we sell 1st property after we move in 2nd property, should we pay cgton this ? If we sell 2nd property after live there 5 years, should we pay cgt? Which property we can exempt cgt if we sell?
Melissa
Hey Melissa,
If you are currently living in the first property when you sell it and move to the second property then the first property will be CGT free (under current rules). If you then sell the other property 5 years later you will pay CGT on a scale of 75%. (15 years out of 20 years ownership as investment).
So in numerical terms…….If you have a gain on property two from time of buying to time of selling of 1 illion dollars. you will have $250K tax free and the other portion will be calculated depending on your situation. That is it will incur CGT more than likely. So in todays terms you will pay tax on $750K (lets say you pay 30% tax at the time) which means you will pay $112500 in tax and the rest is profit.
Now all this assumes nothing will change with our tax system in the next 20 years (ha ha ha) but it gives you some clue. IF still unsure check with your accountant and see what he/she says.
Hope this helps.
Enjoy
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