Hi, I am hoping for some guidance as I am a little confused about some advise I have been given in re to CGT.
I currently own a property in Wentworthfalls,NSW since a divorce settlemnt 2000 and it was valued then at $160,000 . In 2002 I purchased my first investment , also in Mountains property after reading Jan Somers book, isnt she a great role model .
In Oct 2003 I left Mountains and rented out my principal place of residence Wentworthfalls and went to work with Flying Drs in QLd . Where I also purchaesd a property in Mount Isa in DEc 2003 , for $103,000 as rent was more expensive then mortgage. I sold it in Feb 2005 for $180,000 privately. The ATO tells me I will need to pay CGT on this home if I keep Wentworthfalls as my principal place of residence.
My question to those who may be able to help me is re my property in Wentworthfalls
:1. Is it true I can rent it out for 5 years and be CGT exempt, and I have to move back in for 6 months prior to selling ?
2. If I renovate bathroom , kitchen etc, can I claim this whilst I am renting it out ? What if I moved back in could it be deprecaited ?
3. This is an income to me whilst renting it out and I am debt free on this home, yahoo. However it is now included in my taxable income is it not ?
4. Does anyone know about CGT re my QLD property as I thought if I lived in it for 12 months I would be exempt.Thanks for your time .. warm regards Margit
[biggrin]Margit Kent
1. 6 years exemption from when you move out as long as you do not move into another PPOR. You do not have to move back in before selling.
2. Renovations can be depreciated while it is rented. They will not be if you move back in.
3. Rent is included in your taxable income.
4. If you lived in the QLD property after leaving the other property, the 6 year exemption applies to the QLD property and you have lost it on the other property.
It seems to me that you lost the CGT exemption on your first home when you moved into the QLD home. I don’t see how you can still have the first one as your PPOR.
Don’t forget, I am NOT an Accountant. Please confirm the above with a professional.
The Mortgage Adviser
http://www.themortgageadviser.com.au
[email protected]
Essential Links
We have just been through a similar situation.If you’ve lived in Wentworth Falls prior to renting it remains your PPOR up to 6 years. I don’t know about coming back to live in it. (I think ruling is on the ATO site) You have to pay CGT on Mt Isa or CGT on Wentworth for the time you owned Mt Isa – it’s a tricky calculation and you need a good real estate accountant. We paid on our first PPOR that we had rented out when we left to work interstate and it looks like it was the best way to go.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
