Hey guys,
I recall reading a post on here not too long ago that went off on a tangent in regard to CGT and that a sale can be CGT free if the property is sold within 6 years of ownership…Can somebody clarify this for me as I missed the majority of the post when I had to rush out and now cannot find it for the life of me!!!
I currently own a 2br unit that I’m living in and will be looking to lease in the next 6-12 months when my folks complete construction of their Taj Mahal and I can move back home to save funds for my next IP, on my path to taking over the world…. Mwah ha ha.
Just want to know a bit more about CGT implications to keep my options open.
Thanks heaps.
Age doesn’t negate effort – you can never be too young or too old.
only if you rented the property out for a certain period then shifted in your self for about 6 to7 years then in some cases you may not need to pay CGT.
Or if you bought the property before 1984 you are also exempt from CGT.
All property that you make a profit on and was not your PPOR for a period you will have to pay tax on .
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[email protected]Originally posted by foundation:Originally posted by Spanky:Hey guys,
I recall reading a post on here not too long ago that went off on a tangent in regard to CGT and that a sale can be CGT free if the property is sold within 6 years of ownership…True, providing you don’t nominate another PPOR during that time – as in, you can only claim CGT exemption on one property during that period. Some of the tax specialists should be able to explain better.
If you are intending to rent it out, be sure to get a couple of ‘proper’ valuations done, particularly as the market has risen so much recently – this way, if you do end up paying CGT for whatever reason, these valuations can be used to determine capital gains.
<EDIT – but don’t make the mistake of assuming you can also calculate a capital loss from these valuations…>
F. [cowboy2]Originally posted by Rikky:only if you rented the property out for a certain period then shifted in your self for about 6 to7 years then in some cases you may not need to pay CGT.
The other way around. You must live in the property first, then you can rent it out for up to 6 years – no need to move back in again.
See section 118.145 of the ITAA =
http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s118.145.htmlTerryw
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Just a couple of useful things to keep in mind.
1. the start date for the 6 years will be the date the property becomes available for rent (ie. is “in the rental market”), regardless of whether it is tenanted yet. This is also the date you can start claiming expenses. Get some tax advice on items such as preparing the property for rent – you may not be able to claim this against income (it may be capital in nature – your advisor will tell you which).
2. if you sell, the end date will be the date of the contract (not settlement), so if you are approaching the 6 year mark – if you can get an unconditional contract for sale before the end of the 6 years from the start date, then you can have a lengthly settlement (if required) without worring about going over the 6 years. Just make sure it does settle if past the 6 year mark – otherwise you may be in for an unexpected CGT bill!
Hope this helps.
http://www.invested.com.au … InvestEd :: Teaching Australian’s to Invest
And the 6 years can start again if you were to move back into the property briefly and out again.
Terryw
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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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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks heaps guys – you’ve clarified a hell of a lot for me – exactly what I was looking for.
That link was great Terry – austlii is a great website if you know what you’re looking for.
Cheers
Age doesn’t negate effort – you can never be too young or too old.
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