Just been reading a few investment books and on reading about the 6 year absence rule it isn't quite as I thought it was and wanted to seek confirmation.
Scenario:
- I buy Property 1 and live in it for 2 years
- Then buy Property 2 and move into it and rent out Property 1
- After 7 years I decide to sell Property 1 and use the 6 year absence rule partial exception meaning I will only need to pay CGT for the last year it was rented
- After another 3 years I decide to sell Property 2
So from my understanding from the books I have been reading I would not be able to claim main residency CGT exemption for 6 of the 10 years I had Property 2 as I already used the exemption for that period on Property 1 is this correct?
Thanks for any feedback
Thats right. You can only claim one PPOR as your main residence at any one time.
There are also considerations about multiple properties (last I checked), where the six years are cumulative across those you are claiming an exemption, so you'd only get six total years across them and CGT would be distributed proportionately.
Definitely worth getting some tax advice if you're looking at this type of strategy.
Thanks for the replies, clears up what I was thinking
There is an overlap provision of 6 months too – where you can have 2 main residences and claim both, but it only applies if you are moving from one to the other and selling.
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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