have searched through some of the old posts – but i am now more confused than before.
Placed our home (principal place of residence) on the market for sale, in the mean time have purchased a new property to live in. have moved house but the old house has not sold.
were thinking of renting out our old place for 6 months or so and keep trying to sell it as well.
if we eventually sell our old home after renting out for six or twelve months will we then have to pay capital gains tax? if so is there a way to minimise the amount we will have to pay.
have tried looking on the ATO website but was unable to find any explination – if someone can point me in the right direction on the ATO website for an explination that would be greatly appreciated also.[biggrin]
Hello Callander
Basically you can rent out your PPOR for up to 6 years and not have to pay CGT when you sell as long as you don’t declare any other place as your PPOR during that time.
The best thing would be to go and speak with your accountant about this. Here is a link about this subject on the ATO site.
http://www.ato.gov.au/individuals/content.asp?doc=/content/36888.htm
Hope this helps
ElkaElka is correct. You can have a look at the legislation here:
http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s118.145.html
But there is also an opportunity where you can claim the main residence exemption on two places at teh same time for up to 6 months:
http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s118.140.html
Terryw
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You have a 6 month period during which you can claim the CGT exemption on both properties – as long as the first is being sold. (Not sure if it has to be sold or not in that time). After 6 months you will pay CGT – but given the current climate and the 50% exemption it shouldn’t be much.
If you anticipate holding it for a while it might be best to get a valuation done now so as to lock in the big gains made in the last few years and not have them pro rata’d out over the rented period.
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Thanks for you assistance it makes more sense now. greatly appreciated.
Originally posted by elkam:Basically you can rent out your PPOR for up to 6 years and not have to pay CGT when you sell as long as you don’t declare any other place as your PPOR during that time.
But if callander moved into the new home that they purchased..wouldnt this become their PPOR ? in the definition of a PPOR it says things like “does your family live there?” and “have you moved your personal belongings in?” etc etc ?
i would have thought that callander would have to pay CGT (with exemptions) on thier old residence if they rented it out longer than 6 months before selling it ?
cheers
LyndonHi Lyndon
I agree, but beleive you actually have a choice on which property to claim. Maybe the old property would be growing higher during this period. It that case it may be better to claim that.
Terryw
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Parramatta
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Just send me a blank email, with “subscribe†in subject line.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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