Turning investment property into PPOR & getting it valued

Whoever told you this is incorrect. (I'm assuming it wasn't your accountant?)

If your property goes from investment to PPOR, you pay CGT on the percentage of time it was an investment.

ie – buy for $250,000, sold for $550,000, rented for 60% of the ownership period. Capital gain = $300,000 x 60%, = $180,000.

You only need a valuation if the property is going from PPOR to investment, not the other way around.

Dan,

What about s118.192?
http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s118.192.html

(and what happened to s118.196, repealed by the look of it)

Hi Guys,

Terry is it true that if you buy a property, which is your PPOR, then say at some point (say 2 years later) it becomes an investment property. You don't have to pay any CGT(if you sold it) for six years after you lived in it?

Your thoughts?

Dean

Dean, that provision assumes you dont have another property which you are claiming as a PPOR.

Cheers

Yours in Finance

i really dont like capital gains tax…

s118.185 is the section concerned with moving into an investment property.

s 118.185
Partial exemption where dwelling was your main residence during part only of ownership period
http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s118.185.html

INCOME TAX ASSESSMENT ACT 1997 – SECT 118.185

Partial exemption where dwelling was your main residence during part only of ownership period

             (1)  You get only a partial exemption for a * CGT event that happens in relation to a * dwelling or your * ownership interest in it if:

                     (a)  you are an individual; and

                     (b)  the dwelling was your main residence for part only of your * ownership period; and

                     (c)  the interest did not * pass to you as a beneficiary in, and you did not * acquire it as a trustee of, the estate of a deceased person.

             (2)  You calculate your * capital gain or * capital loss using the formula:

where:

"CG or CL amount" is the * capital gain or * capital loss you would have made from the * CGT event apart from this Subdivision.

"non-main residence days" is the number of days in your * ownership period when the * dwelling was not your main residence.

Note:          The capital gain or loss may be further adjusted if the dwelling was used to produce assessable income: see section 118?190.

Example:    You bought a house in July 1990 and moved in immediately. In July 1993, you moved out and began to rent it. You sold it in July 2000, making (apart from this Subdivision) a capital gain of $10,000.

                   You choose to continue to treat the dwelling as your main residence under section 118?145 (about absences) for the first 6 of the 7 years during which you rented the house out.

                   Under this section, you will be taken to have made a capital gain of:

I was told by my accountant that this CGT 6 years exemption only applies when you have less than 2 properties under your name and you only claim 1 PPOR at any point of time. If you have more than 2 properties under your name or claim 2 properties both as PPOR then you can't get this CGT exemption.