I'm about to move into my investment property to live in about 10 days (ie, turning my investment property into my place of residence) and am getting conflicting advice regarding CGT so am hoping someone can give me a definitive answer. My accountant told me I should get it valued before I move in so that I only pay Capital Gains Tax on the gain in value up until now (ie, its value when it stopped being an investment property rather than its value in say 10 years if I sell it then). But people on here are telling me that I don't need to get it valued as the capital gain will simply be a % on how many years I lived in it vs the years it was an investment. I'm totally confused about what to do and whether I should get it valued or not?
I'm sorry to say your accountant is incorrect, there is no need to get it valued. You only need to get a property valued if the property is changind from a PPOR to an investment property.
If changing from an investment to a PPOR, the capital gains calculation is based on the % of time the property was producing income.
Yes but how is the capital gain amount reached? I mean, if I don't get it valued now, then when I sell it in 10 years, won't they calculate it based on its value then rather than the value BEFORE I moved in? Whereas if I get it valued now, then I will know exactly what the capital gain was before I moved in and whatever increase in value there is while I'm living there shouldn't apply?
theplatypus wrote:Yes but how is the capital gain amount reached? I mean, if I don't get it valued now, then when I sell it in 10 years, won't they calculate it based on its value then rather than the value BEFORE I moved in? Whereas if I get it valued now, then I will know exactly what the capital gain was before I moved in and whatever increase in value there is while I'm living there shouldn't apply?Getting it valued will have no effect on how the capital gain is calculated.
CG is worked out on the percentage of time the property was income producing.
ie – Purchased July 2005 for $200,000
Moved in July 2007
Sold July 2010 for $350,000
Property was an investment for 40% of the time (ie, two years out of 5) so your capital gains is ($350,000 – $200,000) x 40%.
Dan42 wrote:theplatypus wrote:Yes but how is the capital gain amount reached? I mean, if I don't get it valued now, then when I sell it in 10 years, won't they calculate it based on its value then rather than the value BEFORE I moved in? Whereas if I get it valued now, then I will know exactly what the capital gain was before I moved in and whatever increase in value there is while I'm living there shouldn't apply?Getting it valued will have no effect on how the capital gain is calculated.
CG is worked out on the percentage of time the property was income producing.
ie – Purchased July 2005 for $200,000
Moved in July 2007
Sold July 2010 for $350,000
Property was an investment for 40% of the time (ie, two years out of 5) so your capital gains is ($350,000 – $200,000) x 40%.
Dan42 is right this is the same information that I was given from one of Margaret Lomas’s books as well. Think you might need to move to a different accountant.
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