I have just bought my first property, I paid 700,000 for a 800 SqMt plot with an old run down house (Appr. 350 SqMt) on it. My intention is to declare it as my POPR ( I have applied for thr FHBG). I hope to do some renovations on it (20K) prior to moving in.
If I decide to move out at some stage, how long do I have to live in it prior to renting it out, in order that I can be CGT exempt when I subsequently sell, say in 5 years.?( I live in Victoria, and bought primarily for the land extent and the potential for its value to go up.)
Can I claim my renovation costs as depreciation when it becomes an IP?
If, at six months, while i continue to live in it, I subdivide a build a new home for sale, how will this new property be treated in terms of CGT?
I hope I have given you enogh information to answer my questions.You should move in before doing the renos because to start with this as a PPOR you need to move in as soon as possible after settlement. You can only have one PPOR at a time subject to the exception allowing up to 6 month sfor 2 PPORs where the one you moved out of is sold. After you move out of your PPOR you can be exempt from CGt on that property for up to 6 years as long as you have no other PPOR. If you subdivide and build to sell then you are likley to be taxed on the profit at your marginal rate.
kiwinvestor wrote:I have just bought my first property, I paid 700,000 for a 800 SqMt plot with an old run down house (Appr. 350 SqMt) on it. My intention is to declare it as my POPR ( I have applied for thr FHBG). I hope to do some renovations on it (20K) prior to moving in.If I decide to move out at some stage, how long do I have to live in it prior to renting it out, in order that I can be CGT exempt when I subsequently sell, say in 5 years.?( I live in Victoria, and bought primarily for the land extent and the potential for its value to go up.)
Can I claim my renovation costs as depreciation when it becomes an IP?There is no time period for capital gains tax exemption however you need to be able to prove you lived in it .
Check the http://www.ato.gov.au web site and search for main dwelling CGT exemption.
however you need to live in the house for a certain time 6 months within the first twelve months to qualify to claim FHBG.
http://www.sro.vic.gov.au/sro/SROnav.nsf/childdocs/-6BF180369BCB3975CA2575A1004420CF-FFEFCD2ABA129376CA2575CB0001A2F0?open
http://www.sro.vic.gov.au/sro/SROnav.nsf/LinkView/3F85F5AD85FA6222CA2575CB0000CC638024A4ADFB9DAED9CA2575A1004420DCkiwinvestor wrote:If, at six months, while i continue to live in it, I subdivide a build a new home for sale, how will this new property be treated in terms of CGT?.The portion that is sub divided being land you intend to build on will have no cgt exemption.
As it is no longer part of the PPOR / Main Dwelling for CGT exemption.
The cost base will be the portion you divided so say you split land 50% then 50% of the original land value is under PPOR and 50% is no longer exempt and the 50% of the original land value is the cost base for CGT.
http://www.ato.gov.au/corporate/content.asp?doc=/content/86198.htm
http://www.localpropertynews.net/articles/general/20041101-subdivision_residence.htm
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