Your opinion please

Hi Milo,

To minimise the CGT, you can register as a Property Trader.

Regards,
George.

I’ve found a way to help you save and earn whilst not selling or delivering any product. If interested, drop me an email or PM me to find out how

Hi Milo,

You unit will be CGT free for the duration of the period of ownership as it was your PPOR for the duration of the period you owned it.

Your house will only be CGT free for the period you live in it – any gains will be calculated based on an apportioing process. Ie $100K profit – 80% of the time the property was an investment property then your capital gain will be $80K.

As such moving in for a few weeks will have negligible difference in gains savings.

You can only have one PPOR at any one time apart from a 6 month period when you are eligible to have two properties while one is being sold.

Capital gains is calculated by subtracting the purchase price from the sale price with a few allowances for things like entry and exit stamp duty, selling agents fees, any section 43 depreciation claims etc.

CGT can be minised by offsetting the gains with any losses incurred selling other recognisable assets or by selling in a no or low income year. The gain will be considered as income and treated accordingly in your next income tax return.

At time of sale you will be up for agents commission, mortgage discharge fees, your portion of land tax etc and if your IP is in NSW you may also be up for the exit tax.

Is there a way that you can retain one/both properties as they appear to be good assets and would add value to your portfolio?

Derek
[email protected]

Property Investment Support Available. Ongoing and never stopping. PM welcome.

I agree with Derek, but if you have ever lived in your home, you may be able to claim this as your PPOR instead of the unit – depending which one has grown in value more.

I think GEO means, that if you are classed as a proeprty trader, then there is no CGT. But there is income tax and you do not get the 50% discount on the gain. So it would probably better not to be classed as a trader. I don’t think you can register for this either. You just submit your return and argue your case if audited.

ps I am not an accountant.

Terryw
Discover Home Loans
North Sydney
[email protected]

Hi Penne,

Not an accountant but for what it is worth.

A broad brushed statement but – a PPOR is CGT exempt (bearing in mind the various restrictions and conditions) and as such your biggest grower should where possible, be your PPOR for as long as possible – even to the extent that you do not move into your unit but rent elsewhere and use your two properties as IPs. Your current home will retain CGT free status for 6 years if you only have one PPOR.

Certainly go and see a savvy accountant and take the before and after values with you.

Be aware that holiday lettings do have specific issues and can be less productive than first envisaged.

Derek
[email protected]

Property Investment Support Available. Ongoing and never stopping. PM welcome.

PS Derek
Noted your comment about having 2 PPOR whilst one is being sold. What is the criteria for this?
Cheeers Penne

Penne

I think the 6 month overlap rule is covered in Section 118-140 of the ITAA. From memory it says you can count two houses as your main residence for a max period of 6 months and give the example of someone having to move into their new house before the old one has sold.

Terryw
Discover Home Loans
North Sydney
[email protected]