renting my own home/Capital gains tax?

Viewing 9 posts - 1 through 9 (of 9 total)

BEAR1964
Participant
@bear1964
Join Date: 2003
Post Count: 702
October 28, 2003 - 11:02 am
Greetings all
I have found a positive Geared property with a 2 bedroom unit on the block as well as the house.
I am putting forward an offer and I already have some one interested in renting the unit.
My question is if I move out of the house I been living in for the past 14 years and move into this other property and renovate it, do I then have to pay capital gains tax on my original home if I choose to sell it a year or so down the track after renting it out?
Regards Bear
walkernick
Participant
@walkernick
Join Date: 2002
Post Count: 68
October 28, 2003 - 12:54 pm
Hi Bear,
The CGT is calculated based on the number of years you rented the place vs. lived in it. In your case since it would be 14 years as PPOR and 1 year as IP you would only pay CGT on 1/15 of the gain. Mind you its not as simply as that, you would need to get an accountant to work it out, however it would be roughly that amount.
-Nick
BEAR1964
Participant
@bear1964
Join Date: 2003
Post Count: 702
October 29, 2003 - 6:10 am
Thanks Walkernick
That’s greatly appreciated, i just wanted to know how it works , and yes i would get an accountant to do the final figures for me.
Thanks again.
Regards Bear
Saskatoon
Participant
@saskatoon
Join Date: 2002
Post Count: 112
October 29, 2003 - 6:27 am
Hi BEAR1964,
Nick has not mentioned that if you move back into your PPOR before you sell, then you should be able to avoid any CGT because of the 6 year exemption rule. You have to work out which property will have less CG and claim on the other. Anyway, why sell?!
Terry
Terence McMahon
HomeWin
Finance
BEAR1964
Participant
@bear1964
Join Date: 2003
Post Count: 702
October 29, 2003 - 6:48 am
Hi Saskatoon
Thanks for your reply!
I dont know about the 6year exemption rule?
As far as why sell? Well im just checking my options , and at the time I will make a desision. I may be able to buy more properties with the money from my original home.
Regards Bear
melbear
Member
@melbear
Join Date: 2003
Post Count: 2,429
October 30, 2003 - 6:43 am
Hey Bear
I have mentioned this in other posts, but will put it here again. You can rent out your original house for up to 6 years and then sell with no CGT. Or, you could move back in after the 6 years, and then out again etc. with no CGT.
However, you could not then claim your ‘new’ house as your PPOR, so there would be CGT on that.
You don’t actually have to make the decision as to which one is your PPOR until you do sell, which may be 5 years down track. At this point you would probably want to work out which has had the most growth, and choose that as your PPOR.
There is lots of flexibility.
Cheers
Mel
BEAR1964
Participant
@bear1964
Join Date: 2003
Post Count: 702
October 30, 2003 - 6:49 am
Hi melbear, thanks for your reply
Cant i have 2 PPOR’s but at differnt times?
Regards Bear
Mortgage Hunter
Participant
@mortgage-hunter
Join Date: 2003
Post Count: 3,781
October 30, 2003 - 8:06 am
Can have two PPORS at the same time for 6 months if they overlap between buying and selling.
Cheers,
Simon Macks
Mortgage Broker
[email protected]
0425 228 985
Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
melbear
Member
@melbear
Join Date: 2003
Post Count: 2,429
October 30, 2003 - 12:46 pm
Bear, you can ALWAYS have one PPOR (except in the case Simon mentioned where you can have two). Your PPOR doesn’t have to be the same property though – it can be forty in your lifetime if you are unfortunate enough to move house that often.
Cheers
Mel