All Topics / Finance / Sell PPOR now Vs in 12 months?

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  • Profile photo of ChristinaMChristinaM
    Participant
    @christinam
    Join Date: 2010
    Post Count: 34
    April 25, 2011 - 10:24 am

    I am looking for a larger property to live in.

    Our options with our current PPOR is

    1. sell it now, or
    2. get a tenant in and sell it in 12 months' time.

    What are the tax consequences if we turn it into an investment property and sell it in 12 months? Which way is better?

    The reason why we want to sell it eventually is that this is a townhouse and the capital gain potential is limited and the reason I'd prefer to hold it for a little longer is the curent market is flat and I want to wait for the market to go up again…

    Any advice is welcome.

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024
    April 25, 2011 - 11:26 pm

    Hi Christina

    If you sell the property now there are no Tax consequences as the property is your PPOR.

    If you decide to sell it in 12 months time then:

    1) Rent received will be added to your income for the period.
    2) Interest, Council Rates, Insurance, and other cash and non cash expenses will be deducted from your income.
        You will receive a Tax credit on the adjusted income. 

    If you own another PPOR then you will pay CGT on the difference in price between the end sales price less adjustments and the value of the property the day it became available for rent less adjustments.

    If you dont own another PPOR then you wont pay any CGT on the sales price.

    As to which way is better it is like asking which piece of string you can see is longer you cannot answer without knowing more information about your personal circumstances.

    Certainly if you feel the market in your area is flat then why not keep hold of it for a while and sell it of when market conditions improve.

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

    Profile photo of ChristinaMChristinaM
    Participant
    @christinam
    Join Date: 2010
    Post Count: 34
    April 26, 2011 - 4:34 am

    Thank you Richard for your quick reply.
    We spoke back in 2009 and I am now back in the property market to look for a larger house. This time I have to find one, because I now have a 5 month old son and need an extra room!

    I am wondering if you can take me as your new client. I found a house that I am happy with. My husband will go have a look tomorrow morning. If he's happy, we'll make an offer.

    Will talk privately later…

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024
    April 26, 2011 - 5:19 am

    Hi Christina

    Sure feel free to drop me an email and I can make some constructive suggestions.

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

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