Hi, I am hoping for some guidance as I am a little confused about some advise I have been given in re to CGT.
I currently own a property in Wentworthfalls,NSW since a divorce settlemnt 2000 and it was valued then at $160,000 . In 2002 I purchased my first investment , also in Mountains property after reading Jan Somers book, isnt she a great role model .
In Oct 2003 I left Mountains and rented out my principal place of residence Wentworthfalls and went to work with Flying Drs in QLd . Where I also purchaesd a property in Mount Isa in DEc 2003 , for $103,000 as rent was more expensive then mortgage. I sold it in Feb 2005 for $180,000 privately. The ATO tells me I will need to pay CGT on this home if I keep Wentworthfalls as my principal place of residence.
My question to those who may be able to help me is re my property in Wentworthfalls
:1. Is it true I can rent it out for 5 years and be CGT exempt, and I have to move back in for 6 months prior to selling ?
2. If I renovate bathroom , kitchen etc, can I claim this whilst I am renting it out ? What if I moved back in could it be deprecaited ?
3. This is an income to me whilst renting it out and I am debt free on this home, yahoo. However it is now included in my taxable income is it not ?
4. Does anyone know about CGT re my QLD property as I thought if I lived in it for 12 months I would be exempt.Thanks for your time .. warm regards Margit
Margit Kent
Margit Kent
Hello,
I looked into this and my feeling is that you can rent out your ppor, and RENT somewhere else, and still claim a CGT exemption. However if you BUY another ppor, then you can still only claim one property as your exempt proprty (you can choose to nominate which property gives you the best tax position). It looks like you bought another place to live in (ppor) and are trying to claim CGT exemption on both, which you cant do. I could be wrong as I am not an accountant. We are about to move back in to our ppor after renting it out for 2 years while we rented another house. Our place is in sydney and has gone backwards by about 80k in those 2 years, and we paid a small fortune in rent so in the end you made a nice profit so dont let it chew you up to bad.
cheers
Pete
I am not an accountant either, but think Pete is correct. You can only claim one property as your main residence. You can rent it for up to 6 years and pay no CGT if sold during this time. If you move in and out again, the 6 years restarts. There is no need to move in again before selling.
If you renovate etc, this can be claimed (depreciation) while renting it out. not while living in it. If you don’t have a loan on the property and rent it out, you would probably have to pay tax on the rental income, but this could be offset by depreciation and other expenses.
You possibly could claim your other house as main residence, but you would lose the exemption on your Wentworthfalls property. It may be wise to chose the one that had gone up the most?????
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi!
My accountant has advised that:
1) if your previous ppor was say A and you rent it out later.
2) you buy and move to another house B, but do not change ppor
3) You can change ppor to B, sell and pay no CGT
4) You can move back into A later on, stay for 6 months and sell again with no CGT.Just recheck once again with your accountant.
rmittlal1.
I beleive you accountant could be incorrect – with 4). If you move back into your original house, then you could not claim this at the same time as you were claiming the other one – except for a short period (6 months) where you can claim two properties at the same time.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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