Just thinking (dangerous at this time of the am) if I was to move into my IP and turn it into PPOR
does anyone know the length of time I would need to live in it before I could sell it, to avoid CGT?[blink]Jenny1
unfortunately the ATO has you… you need to conduct a valuation at the time it’s usage changes and when you sell it will be based on that. I am not a tax accountant…seek independent financial advice…etc etc.
http://www.ato.gov.au is an excellent resource.
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
Hi Jenny,
As John has indicated the this property will still be subject to CGT as some of it’s life was spent as an IP.
The only saviour you have is if this property was originally your PPOR and you have moved out for a period of time of less than 6 years provided you did not buy another PPOR during this 6 year period.
Suggest you search the ATO website and download the CGT guide. It covers this scenario in some detail.
Derek
[email protected]
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi Jenny1,
If the property was first purchased as IP, you must pro rata the number of days you held it for investment as opposed to the number of days PPOR. The capital gain is then reduced by this %.
Cheers,
Mark Unwin
Williams Partners Pty Ltd
http://www.wp.com.auhow strange – I was sure I read only recently on the ATO website that they had changed from number of days to a valuation method…. but now I can’t find it. Sorry for the red herring – it does appear to be the number of days method thatis used.
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
Hi John,
I believe the difference here is that the property was initially an IP.
As I understand it when a property first exists as a PPOR and then becomes an IP the process you describe is undertaken.
Now we will have to wait for an expert to come along and clarify this for us all.
Mark where are you?
Derek
[email protected]
http://www.pis.theinvestorsclub.com.au
0409 882 958That’s right Derek.
When the property is originally your PPOR and then changes to IP, valuation method is taken.
When property is IP that changes to PPOR, number of days to used.
Cheers,
Mark Unwin
Williams Partners Pty Ltd
http://www.wp.com.auHi Mark,
can you clarify a couple of things for me. Does the valuation method mean that you pay less tax. Plus- our IP was originally our PPOR and then we inherited our current PPOR. Does this count as having bought a PPOR, or could we still move back into the IP and avoid Capital gains?
I’d love to hear your thoughts.
Landt.Hi Landt,
The valuation method doesn’t mean you pay more or less tax. It is dependent on how much the property has gone up in value whilst it was your PPOR.
You can only have one PPOR (there is a small time limit where you can claim both in between moving). Therefore it is your choice whether you treat your IP as being your PPOR (in which case you will have to pay CGT on your new proprty) or elect to have the new property as PPOR.
Once you have two properties, you will not be able to avoid CGT (unless the property market doesn’t go up!)
Cheers,
Mark Unwin
Williams Partners Pty Ltd
http://www.wp.com.au
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