All Topics / Finance / CGT Advice needed

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  • Profile photo of emmybemmyb
    Member
    @emmyb
    Join Date: 2009
    Post Count: 23
    March 12, 2010 - 8:50 am
    Myself and my partner are thinking of buying an investment property to renovate and resell. We are currently renting the home we live in and my partner is not on the lease. My partner is in the high tax bracket and we are looking at possible ways of getting around the CGT.
    We were thinking that we could claim the new property as my partner's PPOR to avoid paying CGT. Is this possible if he is only living in it for around 6 months? (excluding buying and selling settlement periods).
    I would stay on the lease at our rented place. Even if I have a lease as a tennant elsewhere in my name, can I claim the new place as my PPOR? We are willing to move into it while doing the renovations so it really would be our PPOR and would get all the mail diverted etc.. However, I would still keep the lease on at the property we rent as I don't want to lose it and would move back into it after PPOR Property is sold as well as staying there occaisionally while doing the reno's at the new house.
    The other scenario would be that If it was not our PPOR and just an investment property which we would sell within 6 months of buying, how much CGT would we have to pay?
    Any information regarding this would be greatly appreciated
    Emmy
    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    March 13, 2010 - 12:56 pm

    If you are buying and renovating with the intention of profit, then you won't be entitled to the CGT exemption.

    Other than that I cannot see why you could not claim a place as your main residence while also renting another place elsewhere. But to be entitled to the CGT exemption you must first establish the place as the main residence, to do this you need to prove (if audited) so. see TD 51 http://www.google.com.au/url?sa=t&source=web&ct=res&cd=1&ved=0CAgQFjAA&url=http%3A%2F%2Fwww.ato.gov.au%2Fredirect%2Fatolaw.asp%3Flocid%3Dcgd%2Ftd51%2Fnat%2Fato&ei=Z4ubS4uEDpeXkQW7lo26BA&usg=AFQjCNE-W6KINGsWzHZ3IVOiTIvFfAbGMw&sig2=lxEuH0Ya442HBSIi6vZC5w

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

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