Hello all. I've done a fair bit of searching and really can't find specifics relating to this question. The ATO calculators don't cover complex situations.
I'm selling my house in WA which I built and moved into in Nov 2005. I was then posted back to the east coast in Jan 2006 and rented out the property until it sells, settles in Feb 2011. I was single when I built the house which all up cost around $315,000. I had it valued when I moved out (Jan 2006) which came in at $370,000.
I bought a new house over on the East coast in Jan 2007 with my now wife and we moved in straight away.
The house in WA is selling for $500,000.
My questions are:
Can I elect to keep my WA house as my PPOR even though I moved into a house I bought on the East coast? ORShould I get a retrospective valuation done for Jan 2007 when the home in WA ceased to be my PPOR? The reason for this is that it put on all the the capital gain during 2006 and was bank valued at $500,000 in Jan 2007. ie if it was restrospectively valued at $500,000 in Jan 2007 would I not be up for any CGT. OR
Am I up for $130,000 (minus expenses) capital gain less the approx year out of 4 that it will still be classed as my PPOR?
Cheers
Anyone?
I kinda sounds like you elected the east coast house as your PPOR, and that therefore you do not qualify for the 6 year absence ruling. The type of loan you took out to purchase the east coast house would no doubt be sufficient grounds to deem this to be so, in the eyes of the ATO. If you gave them a quick call they'd verify for you.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
I think you could class it as your main residence and have it CGT free – but this would expose the new one to CGT. Which has had more?
see ID 2003/1113
http://law.ato.gov.au/atolaw/view.htm?docid=AID/AID20031113/00001ID 2003/1112
http://law.ato.gov.au/atolaw/view.htm?locid=%27AID/AID20031112%27&PiT=99991231235958s 118-192 ITAA 1997
http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s118.192.htmlTerryw | 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
Thanks for the responses. I rang the ATO today and got the official word.
There are 2 options.
#1. Elect for the WA property to remain the main residence up until I sell it, CGT free for 6 years after moving out. But then the other house wont be my main residence and I'd be up for CGT for the appreciation between when I bought it in Jan 07 to when I sell the WA house.
#2. Get the WA house retrospectively valued for Jan 07 (when I bought the other house) as it put on the vast majority of the appreciation before this date. Then pay CGT on the difference between the valuation in Jan 07 and what it is sold for (minus selling expenses). Then the east coast house I bought in Jan 07 become my main residence and is not subject to CGT for 6 years after I move out. This is the preferred option as the WA house was valued at $500,000 in Jan 07 (approx the selling price in Jan 11), and the other house has appreciated by about $80,000 since I bought it (which which will be CGT free).
The ATO was actually very helpful and it was worth the 30mins on hold to get it sorted. As retrospective valuations can be a little complex it worth getting your house valued when you move out if you plan to keep it and buy another house. This will allow constant reevaluation of your financial position and not get any nasty CGT bills when you go to sell…
And remember, if the valuation doesn’t come in at what you want, try another! Spending $300 could save you thousands.
I had one come in $50,000 more recently.
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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