One of the options that we are looking at for our IP (always has been an IP for over a decade) is to subdivide (if council allows) and then build two townhouses on the block. Sell one to pay off all the debts and hopefully keep one debtfree. If we decide to make it our PPOR for say twelve months from completion, do we still have to consider capital gains tax when we sell it, if we rent it out for the following few years?
Bit complicated but would appreciate your thoughts
Thanks
AstraFrom my limited experience, I believe CGT is applicable to the portion of time it has received income. So I you rented it out for say 3 years and had lived in it for 1 year, then CGT would be applicable to 75% of the profit (divided by 2 because you've held it for over 12 months)
Yep, CGT will apply because you can only class a place as your main residence, and therefore get the exemption, after having lived in it.
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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