never too late, that's certainly an alternative we could consider, but the lack of people renting out the second property during that first year means 100% of the loan expenses will have to be covered by us during that period. Otherwise if there are renters inside, at least we'll only cover some portion of the loan, not everything. At the end of the day, though, the CGT we may end up paying could be the same (or similar) to what we otherwise could have paid to the bank during that one year period, should we choose to do everything as you've suggested. It really comes down to careful calculations and figuring out what alternative works best for us. I'm seeing my accountant this week, and we'll discuss it further.
There have been some really helpful suggestions in this forum, and good sources of information. I've also been digging myself for more info, so I'll see how it all goes.
Thanks again!
MsTrump wrote:never too late, that's certainly an alternative we could consider, but the lack of people renting out the second property during that first year means 100% of the loan expenses will have to be covered by us during that period. Otherwise if there are renters inside, at least we'll only cover some portion of the loan, not everything. At the end of the day, though, the CGT we may end up paying could be the same (or similar) to what we otherwise could have paid to the bank during that one year period, should we choose to do everything as you've suggested. It really comes down to careful calculations and figuring out what alternative works best for us. I'm seeing my accountant this week, and we'll discuss it further.There have been some really helpful suggestions in this forum, and good sources of information. I've also been digging myself for more info, so I'll see how it all goes.
Thanks again!
You will also have to collect tax for the ATO when you sell in the form of GST.
Let me get this straight. You want to embark on a venture that is going to make you a profit and put extra money in your pocket. You are able to take advantage of a loophole in the tax system by living in one property for 12 months and thereby avoid paying CGT on that property. And yet you are complaining that it's unfair to not be able to use that loophole to avoid paying tax on the second property?
The PPOR CGT exemption is designed to protect everyday homeowners from having to pay tax on the sale of the biggest expense in their lives. It is, in effect, a gift from the government to people who genuinely live in a home. The occupation of a property for 12 months is only an indication to the ATO that you were intending the property to be your PPOR. It the ATO formed the opinion that you were only living in the property for 12 months to avoid paying CGT, you would lose the exemption, regardless of the fact that you have no other PPOR.
Rather than complaining that the ATO are getting something for nothing, how about being grateful that you are able to get something for nothing, that is, full profits on a property that you are only going to live in to avoid paying CGT?
If don't want to pay tax, then don't earn extra income. It's that simple.
K
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