CGT help please .. how do I work out the total cost of the land and building from when I lived in my property prior to renting it out for 5 years, and how do I get a valuation of the property from when I rented it out. I have been living in the house, my PPOR for 4 months and have just accepted an offer to sell. My accountant wants answers to these questions. I built the house 19 years ago. I thought the sale would be CGT exempt. I checked the ATO CGT exemption tool but did not work for me because property I am selling had not been my only PPOR. Thanks in advance.
i am confused by what you wrote above. You only rented it out for 5 years but have held it for 19 years.
Did you live in it prior to renting it out?
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 Terryw .. yes I lived in property I built for years prior to renting it out. During that time I bought 2 other IP's. I then rented out property No.1 and went to live in one of the IP's which was then my PPOR for 5 years. I have moved back to property No1 and have an offer on it and am trying to work out CGT position. Thanks for your comments.
Oh, OK. You can only have 1 main residence at any one time.
So I would think you can claim it as your main residence for the time you lived in it up to the time of moving out. So you would need a value for this date.
You would also need a value at the date you moved back in as you can then begin to claim it again as your main residence.
You should talk to a valuer about this as they can probably give you a value based on sales data.
Say it was worth $200,000 when you started to rent it out and then $400,000 when you sell (it probably hasn't moved in the 4 months you moved back it.
That is a $200,000 again.
From this you can deduct stamp duty and other purchase costs and then selling costs too such as legals and agents fees etc.
Say $20,000
Your net gain is then $180,000
Then you have to add back any depreciation claimed – but this depends on when you purchased it and you may not have to in this situation.
But assuming the gain after costs was $180,000 you would get the 50% CGT discount for holding it more than 12 months, so the assessable gain would be $90,000.
If you jointly own with a spouse 50/50 this would be an extra $45,000 on each of your taxable incomes.
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
Thank you very much Terryw. The land was $26,500 in 1990. I built the basic house for $80,000+, then did all the usuals; fencing, floor coverings, window treatments, paving, landscaping etc. When I moved out it was valued at approx $220,000. When I moved back in approx $325,000. Am a single parent, sole owner. You say '.. you have to add back any depreciation claimed – but this depends on when you purchased it and you may not have to in this situation'. Can you explain that further please?
thats about the limit of my knowledge. You will have to check with your accountant regarding depreciation as it only applied to properties purchase after a certain date.
based on the about I would say your taxable gain would be no more than $50k. – but i am not a tax agent so may be wrong.
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
Very helpful .. thanks Terryw taking time to comment and impart your thoughts. Appreciated very much. Took me 20 years to acquire just 4 properties with little knowledge except looking for future security. Must admit I made lots of mistakes structuring. Have read Steve's book and will continue to educate myself even though a bit late in the game! Thanks again.
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