All Topics / Help Needed! / CGT implications

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  • Profile photo of tash1974tash1974
    Member
    @tash1974
    Join Date: 2007
    Post Count: 2
    March 23, 2007 - 12:55 pm

    We built our current home 3 years ago. With property prices on the rise over recent years the home has doubled in value. We are looking at anew home to live in and are thinking about retaining our current home as an investment purpose.

    Could anyone give insight into the following eg.

    built and moved in 2003-04 (value = $210k)
    looking to use as inv prop in 2007 (value = $490k)
    sell inv prop in 2009 (value = $520k)

    a) When we sell are we liable for CGT?
    b) If so how is it calculated for a house thats gone from main residence to IP with a large variation in value?

    Any guidance would be appreciated.

    Ta

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    March 24, 2007 - 10:57 am

    I am not an accountant, but think it is worked out roughly like this:
    Selling Price, $520,000 minus Value at time of renting, $490,000 = $30,000 capital gain.

    From this capital gain you can minus purchase and selling costs such as stamp duty, agents fees and legals.

    I am not sure if how they would need to be portioned, but maybe it would be a % based on the time the property was available for rent.

    You may also have the option of still claiming the old place as your main residence and not having to worry about CGT at all. This will depend on whether you wish to claim the new property at the same time too.

    Terryw
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    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024
    March 24, 2007 - 11:13 am

    Another consideration would be to sell the PPOR into Trust now pay the stamp duty and then use you would be able to claim all of the interest as a taxable deduction.

    The funds raised you could use as deposit on your new PPOR.

    Cheers

    Richard Taylor
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