Minor beneficiary must submit a tax return if they are presently entitled to income of more than one trust, or if they have other income etc.

It appears that you are purchasing an IP (dwelling C) and are hoping to use it as an IP for a time and then demolish and rebuild within 4 years.

Since property C is initially an IP, you will not be able to nominate this as a PPOR until you do in fact occupy it as your main residence.

The 4 year build concession deems vacant land or an…[Read more]

Here is a hypothetical response.

Clarifications needed.

1) What is the trading entity (sole trader, company ?).

2) Is just the business being sold, as opposed to a company that conducts the business ?

3) If the business is being purchased (rather than a company conducting the business), has the purchaser also purchased the book debts ?…[Read more]

Inappropriate quote

s.118-192 market value cost base deeming only applies for a dwelling that would have been a 100% exempt main residence prior to first using it to earn assessable income.

The original post indicated that this dwelling was initially an IP

darkness72 wrote:

Purchase an investment property at Auction, – lets say 600k
I pay with my own funds (redrawing funds from my PPOR home loan) the Deposit – 10% 60k

At settlement the bank investment loan commences for 600k – remaining 540k to the vendor.

The other 60k the bank places back into my PPOR.

   If you redraw $60k from PPOR loan…[Read more]

Which state ?

Ynchai wrote:
Thank you so much for your replies. Really helpful.

@TerryW, i just read the tax case you referred to, it sounds like the interest on creating capital is not tax deductible, and construction could ve argue as capital creation even with intention to rent out the property so based on this case, it wont be tax deductible during…[Read more]

CGT still matters because it is a tax on inflation.

Even your dependents may inherit the property with your historical cost base and substantial underlying tax liability – AKA 'death taxes'. I seem to remember Terry trying to raise estate planning issues with you.

Present value does matter with capital appreciating assets.

What makes you think…[Read more]

From your stated facts:

Valuation is at the first day it was rented for cost base

This is the day it is deemed acquired by you for the purpose of tracing ownership and apportioning

GST ?

Loss of six year absence main residence CGT exemption.

Sigh …

Doesn’t matter if you move into another dwelling you own.

The s.118-145 election deems your vacated dwelling (and no other) to remain your exempt main residence for a certain time.

Instalments of capital from a deferred PPOR disposal would not be considered ordinary income for tax law, so maybe that swayed Centrelink.

Renting is different.

Not sure how Centrelink would treat this for assets test.

Sounds like capital based on the disclosed facts. 1) extent of replacement = entire external, 2) use of more durable non-rust copper to replace cast iron, 3) Possibly initial repair where the pipes were rusty or defective from the time purchased.

Possibly zero deductions and zero income if it looks entirely motivated my domestic reasons.

The valuation date is the day it was first used to produce income – this is the first element of cost. This is probably what your accountant was telling you.

If you elect to disregard any capital gain by treating it as your main residence during your latest absence due to living in the new PPOR then you lose the exemption for this new residence…[Read more]

lizu wrote:
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?…[Read more]

Generally, you get one main residence exemption, except perhaps for a 6 month overlap as Terry said.

Take your details to another accountant to get an informed opinion.

Cheers,

Rob

The main residence exemption would normally require occupying as your main residence as soon as practicable.

Cheers,

Rob

theycallmeBruce wrote:

But the only thing you can purchase in your SMSF that you can benefit from is artwork, you can purchase this and hang it in your own hallway provided that is the most logical and secure place for it. Anything else like this you can buy and benefit from?

Another example of bad advice.

Cheers,

Rob

The key requirement is to be able to access the small business concessions in Division 328 ITAA97.

The first requirement being that you carry on a business.

An activity of renting a single holiday property appears to be mere passive investment income based on the facts you have given above.

This is regardless of whether the asset is held…[Read more]