Hi all Were looking at selling the place were living in and am wondering if we pay cg. We were told that because we were living in it that we dont pay it is this true
Yes, that is true. No cgt on your PPoR.
You pay cgt on any Investment Property.
If you sell your I.P within 12 months from purchase, you pay cgt tax on 100% of the gain, at your marginal tax rate on your salary.
If you sell the I.P after 12 months from purchase, you pay cgt tax on 50% of the gain, at your marginal tax rate on your salary.
If you use your PPoR as an I.P, you can rent it for 6 years I think before you will become liable for cgt on it.Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
You sure can.
L.A Aussie has it correct.Enjoy the cash! [cigar]
I believe that you are not correct on the PPor Marc.
Check out the ATO website:
http://www.ato.gov.au/individuals/content.asp?doc=/content/36878.htm&pc=001/002/026/016/003&mnu=9278&mfp=001/002&st=&cy=1It states there:
To obtain full exemption from capital gains tax:* the dwelling must have been your home for the whole period you owned it
* the dwelling must not have been used to produce assessable income, and
* any land on which the dwelling is situated must be two hectares or less.My understanding is that you have to pay prorata CGT.
EG You owned your house 10 years and it increased $100,000 in value. The first six years you had no rental income. Then you rented out half the house for two years and the last two years you rented out the whole place.
Your capital gains tax would be
6 years = 0% of $60,000
2 years = 50% of 50% of $20,000 = $5,000
2 years = 100% of 50% of $20,000 = $10,000
Total CG to be included in your tax return $15,000Hope this helps
Good Luck
I forgot to mention that you definetly want to contact a good accountant to confirm this. We are not licensed financial advisors or accountants.
If is your home and you have been living in the house, you pay no CGT period.
No figures or nothing.
Dino Livanidis
http://www.npis.com.auDino
Not always.
You may still have to pay CGT on your own home. Depends if it is more than 5 acres and if you have run a business at your home amongst other things.Terryw
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Marc
can you please let me know where you have heard/read off the 6 year rule.
I cannot find anything about it on the ATO website. My understanding it that you have to prorata the rental time.
Not sure; I thought I heard (read) it on this forum, but I may have been horribly drunk as usual and didn’t know where I was.
But I did hear it somewhere and it stuck in my head.
I was like you bb – I thought the rental period cap growth was pro-rata.
It is a factor for us as we are renting our PPoR at the moment and intend to do so for a while yet. I had better find out for certain I suppose – another call to the accountant..Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
The 6 year rule is part of the Tax Act, ITAA 1997:
http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s118.145.htmlTerryw
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Send an email to get my newsletter.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 Terry,
I just got off the phone to my accountant tonight (my time in L.A) and saw your post.
He confirmed that if you rent your PPoR out, after 6 years of renting you will pay cgt on the period you rent your house for.
There is no cgt payable if you rent it out for less than 6 years.Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
Have also read, but would check with accountant, that you can move back in just before 6 years is up on ppor, then move out again and be eligible for another 6yrs.
Does anybody know if CGT applies if you sublet two rooms in your PPoR?
Originally posted by bridgebuff:Does anybody know if CGT applies if you sublet two rooms in your PPoR?
Believe it does, on a pro rata bases.
http://www.ato.gov.au/individuals/content.asp?doc=/content/36910.htm
I did this on first ppor. Can be treated two ways – (1) As a private nature – do not need to claim income (2) Neg gear. You will have to pay CGT on this portion when you sell though 2/3.
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