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You were right, Terry. I ended up calling the ATO and they said I can apply the 6 year CGT exemption for absence from main residence rule for the time the property was rented on my extended visits to the UK, so it is exempt from CGT while it was my PPOR.
The market value for calculating the CGT is taken from the time I moved out of the old property and into the new property. It is not taken from the time of settlement on the new property as the 6 month overlap applies until it was rented. The ATO also said that as the property sold for less than it was valued for when I first tried to sell it, I can claim a capital loss.
Thanks very much for your help.
Cate
Thanks for your reply, Rob. I'm not sure what you mean by:
'If you didn't use the absence rule when initially vacated, and don't choose to apply it now, then you will have to apportion non-main residence days from that original deemed date.'
I thought that Terry's advice was that I could use the absence rule as I was only absent from the property for 19 months in total. Then the valuation would be taken from the time it ceased to be my PPOR (2011). Is that what you're saying?
Cheers,
Cate
Thanks for your comment, Terry. Up until the point I purchased the second residence, the old house was my home and only property … so I can't understand why the accountant is saying I need to treat it as an investment property from the time I first had a tenant in it.
What can I do if my accountant still insists that he is right? Do I find another accountant, or can I instruct him to do as I think is right?
