I lived in a house for 15 years, then built a new one and put renters in the “old” house and moved into the new house. I refinanced the old loan at that time. I had renters in the old house for 5 years and then sold it.
From what date do I pay CGT, from when I first bought the house (residence) or from when I put renters into it?
You don't pay capital gains on your PPOR.
So for the 15 years you lived there, when it was your home and not an investment you don't have to pay capital gains. For the last 5 years, when it was an investment…that is where you have to pay capital gains.
Friends of mine recently sold their unit where they lived in for 3 years and rented out for 6 months when cash was tight. They had to pay capital gains for the 6 months that it was rented out.
Ryan McLean | On Property
http://onproperty.com.au
Email MeYou could chose to claim an exemption in full, under s118-145 of the ITAA 1997
http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s118.145.html(but the new house will not be CGT exempt during this period)
or
apportion the gain over the period rented, s118-185
http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s118.185.htmlTerryw | 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
Time to change accountant. I knew that I could not have to pay CGT for residence.. Even more, after I made the post, I remembered that when we set the loan up for the new house we transferred the ownership of the old house from joint names to mine only.
Thanks for the info. Anyone got a good accountant in Melbourne’s west??
Assumption – you purchased the property before August 1996.
At worst, only 1/4 of the gain would be assessable, and you would get a 50% discount for owning the asset for over 12 months.
As Terry said, you could choose to claim a full exemption, but this would mean your new house would be assessable for the first 5 years, as you can only claim one main residence at a time.Hello
We lived in our old home for 22 years from 1986 to 2008.
We moved into our new home then and it is now our PPR.
Our old home is now rented out and is income earning.
If we sell our old home some time this year 2011 will we have to pay any CGT or are we exempt under the 6 year rule.
As we have nominated our new home as our PPR and all our records now indicate this are we still able to use the 6 year rule for our old home?If so how do you nominate the old home as your PPR if you live in another home which has already been nominated as your current PPR for 2 years?
Any information appreciated.
midgo wrote:HelloWe lived in our old home for 22 years from 1986 to 2008.
We moved into our new home then and it is now our PPR.
Our old home is now rented out and is income earning.
If we sell our old home some time this year 2011 will we have to pay any CGT or are we exempt under the 6 year rule.
As we have nominated our new home as our PPR and all our records now indicate this are we still able to use the 6 year rule for our old home?If so how do you nominate the old home as your PPR if you live in another home which has already been nominated as your current PPR for 2 years?
Any information appreciated.
From what you have written you could probably claim the CGT exemption on the sale of the old house. But your new home will not be CGT exempt during this period.
There is no nomination needed. you just don't include it in your tax return. Check with your accountant.
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
Quote:From what you have written you could probably claim the CGT exemption on the sale of the old house. But your new home will not be CGT exempt during this period.There is no nomination needed. you just don't include it in your tax return. Check with your accountant.
Thanks for the reply Terry.
By our new home not being exempt, do you mean during the current tax year ie 2011 that we claim our old home as our PPR?
After selling the old home and claiming CGT exemption for year 2011.
We should be able to claim exemption for our new home later if we rent it out and buy another home down the track say in a cuople of years or so, is that the case?
You can't have 2 main residences exempt at the same time (except for a 6 month overlap provision if buying/selling)
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
The 6 year rule doesn't apply, as you have bought another PPOR.
You can, however, elect to call your first PPOR, your PPOR for the entire time you owned it.
If you do this though, your current home will be subject to CGT when you sell, for the period from when you bought it, to when yousell the first PPOR.
It's your choice as to whether you want to pay a small amount of CGT now, or an amount later on when you sell the current PPOR.
Dan42 wrote:The 6 year rule doesn't apply, as you have bought another PPOR.You can, however, elect to call your first PPOR, your PPOR for the entire time you owned it.
If you do this though, your current home will be subject to CGT when you sell, for the period from when you bought it, to when yousell the first PPOR.
It's your choice as to whether you want to pay a small amount of CGT now, or an amount later on when you sell the current PPOR.
I am confused by you saying the 6 year rule does not apply in my case?
I am further confused by the PPR rule after reading this
http://www.ato.gov.au/individuals/content.asp?doc=/content/36887.htm
Especially these sentences in the above ato page.
Quote:Any help clarifying this would be appreciated.
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