I am new here, so please excuse me if this comes under the category of "dumb questions"
I know very little about CGT and would love your thoughts on this one.
Me and my husband bought our first home in 2001 and lived in it for over 12mnths. Since Jan 2004 it has been rented out. We bought a block of land, lived on it and sold it (didn't pay CGT), and bought another house which has been our primary place of residence since. A couple weeks ago we moved into a rental property and will be shortly renting out our primary place of residence.
My question is in regards to the first house, next month it will have been rented for 6yrs, and I just read today about not paying CGT if it's rented for less than 6yrs. Does this still apply even though we've owned other property since then? And what happens if I sell a property after renting it out for 7yrs? Do I pay CGT on the whole 7yrs or just the last year?
Thanks for your help
Unreal wrote:I am new here, so please excuse me if this comes under the category of "dumb questions"I know very little about CGT and would love your thoughts on this one.
Me and my husband bought our first home in 2001 and lived in it for over 12mnths. Since Jan 2004 it has been rented out. We bought a block of land
When ?
Unreal wrote:, lived on it and sold it (didn't pay CGT),Why did you not pay CGT was it claimed as PPOR exemption ?
If it was and it was from 2004 to 2009 then you have already claimed PPOR / main residence exemption during the 6 years you rented out your house. You can only claim one residence as your PPOR / main residence at the same period of time.Unreal wrote:, and bought another housewhen ?
Unreal wrote:which has been our primary place of residence since.When ?
Unreal wrote:A couple weeks ago we moved into a rental property and will be shortly renting out our primary place of residence.You may need to get a valuation done to set the cost base for the PPOR and to work out the CGT part.
Unreal wrote:My question is in regards to the first house, next month it will have been rented for 6yrs, and I just read today about not paying CGT if it's rented for less than 6yrs. Does this still apply even though we've owned other property since then?Depends on if there is a clash with PPOR exemption between each property as you can only claim one property as exempt at same time period.
Unreal wrote:And what happens if I sell a property after renting it out for 7yrs? Do I pay CGT on the whole 7yrs or just the last year?http://www.ato.gov.au/individuals/content.asp?doc=/content/36910.htm&page=3&H3
If you have not already claimed a PPOR / main residence exemption then –
You have to work out how many days past the 6 years you have
then you need to work out the total days over the 7 years.
Part assessable capital gain = capital gain * days over 6 years / total days over 7 yearsThanks Duckster, I see I left a lot of crucial info out of the question.
Yes, there is an overlap. We moved from the first house in Jan04 and rented till Jun05. This is when we bought the land (5 acres). We then sold the land in Apr 06, didn't pay CGT because PPOR. In Feb 06 we bought the 2nd house and have lived in it since.
We will be renting the 2nd house out, but it will not be for more than 6yrs, so is there is a need to get an evaluation done? We have recently had an REA give us an estimate, would this be good enough?
And just to clarify, if we do buy a 3rd house and live in it, the 2nd house will then be subject to the CGT? It is only exempt while we are renting?
I always thoughty you couldn't apply the main residence CGT exemption to vacant land.
You can only have one house count as your main residence at anyone time – except for a 6 month overlap period. The main residence doesn't have to be the one you are living in, but could be the former one. You can just chose whichever has gone up the most in value.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
I don’t really get it guys sorry
yeah I’m dumbso if you bought a property, rent it out for less than 6 years and you don’t have to pay cgt?
As long as u don’t claim any cgt exemption during that period of course
am I right here?
Nope
It means you can rent out your main residence for up to 6 years with incurring CGT in some situations. One requirement is that you can only have 1 main residence at any 1 time. Another requirement is that it has to be your main residence. To become your main residence you have to live in it first.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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