Need some advise on selling two properties I own (both under my name).
I am married encase that is useful in any way.Here is the background.
Property 1 purchased in 2003, lived in it fulltime until Jan 2010.
Property 2 purchased in Oct 2010, moved in Jan 2011.Since Feb 2012 I have been living between both properties equally (they are located 25km apart).
Either property has generated an income at any time.I am currently building a new primary residence which will be ready between Dec/Jan.
I was hoping I could sell both properties by Jan 2013.
Obliviously it would be better to sell both properties when they are deemed primary residence.Ideally I sell property 1 first in around Dec and property 2 in Jan 2013.
However I believe only 1 primary residence can be sold in a 12month period?
I know the ATO go off the sales contract signing date not settlement date, so a longer settlement maybe able to help?All feedback will be greatly appreciated.
ScottHi scotts, this link should give you the required information.
http://www.ato.gov.au/corporate/content.aspx?doc=/content/00208572.htm&page=22&H22
Hi Scott, you are a bit confused regarding your PPOR.
You cannot claim 2 PPOR (Principal Place of Residence) at one time.
So you need to make the decision as to which you will claim as your PPOR from October 2010 until you sell.So you need to see which property has made the MOST gain in that period. That's the one you want to have as your PPOR for that period. That way you will pay the least amount of CGT (Capital Gains Tax). Of course you need to look at the figures (purchase cost, expenses etc to be more accurate). Your accountant should be able to advise you.
Sometimes you can get away with a 6 month crossover (which you should be able to do as you didn't rent it out. So that will bring you until April 2011. So you'd only liable for CGT on 1 year if you sold now.
Sorry for the bad news. Good luck.
Catalyst thanks for the info.
I'm aware you can only claim 1 PPOR at anytime.
What I'm wanting to know is what timeframe I would need to sell both properties in without paying CGT.
I thought properties can go from PPOR to Non-PPOR and back again.No you HAVE TO PAY CGT on one of them for the time you owned both.
You have 2 properties at the SAME TIME. You have to choose which one is your PPOR and which one is not.
Yes you can go from one to the other but you need to decide which it is. There is no timeframe. From October 2010 you have to pay CGT on one until you sell one. It makes no difference when you sell.
i thought you can own a property as PPOR for 12months, rent it out of less then 6 years, move back in for 6months and sell it for PPOR?
Yes you can IF you don't have another PPOR as you are still claiming that as your PPOR.
If you buy another then THAT is your PPOR.
but you don't actually claim it as PPOR until you sell it correct?
would this not work..
Property 1 purchased in 2003, lived in it fulltime until Jan 2010.
Property 2 purchased in Oct 2010, moved in Jan 2011, lived there until Jan 2012.
Property 1 moved back in Feb 2012 for 6months sell July 2012.
Property 2 move back in Aug 2012 for 6months sell Dec 2012.??
scotts wrote:but you don't actually claim it as PPOR until you sell it correct? Yes unless you are liable for Land Tax- then you need to stipulate which one is your PPOR.would this not work..NO! Sorry- you can arrange it anyway you like but it doesn't change the facts.Legally you CANNOT avoid CGT on one property from October 2010. If you want to try it go ahead but no accountant will endorse it. I'd like it if you could do it. That way I could just keep saying I'm living in my properties all at different times and not pay CGT either.
Property 1 purchased in 2003, lived in it fulltime until Jan 2010. Yep PPOR (until Oct 2010 actually)
Property 2 purchased in Oct 2010, moved in Jan 2011, lived there until Jan 2012. YEP if this is now your PPOR you pay CGT on the profit of the first property for that time.
Property 1 moved back in Feb 2012 for 6months sell July 2012. OK if that is now your PPOR then you pay CGT on the other one for that time.
Property 2 move back in Aug 2012 for 6months sell Dec 2012. Ok if you have sold the other one this is now your PPOR and you don't pay CGT from this time on. And you couldn't keep flipping from one to the other.and it makes no difference anyway.You are only talking about CG on 2 years MAX (less if you sell one sooner). And you only get taxed on half that amount at your pay tax rate. Even if the property went up $100,000 in the 2 years you'd still only pay approx $15,000 CG (assuming 30% tax rate).
Yes but……
Put it this way: you are probably going to have made a larger capital gain on P1 over 9 years than P2 over 2 years. If P1 is taken as your PPOR for the entire period then you pay no cgt on this sale and only 50% of the gain at your marginal rate on the other.
Option 2 the reverse of option 1
Option 3 50% @ MRT on 1/9 of the CG on property 1 (ie the cg on the % of the period that it wasn't your ppor)
It becomes seriously academic – option 1 is probably your most cost effective outcome. Remember that you are also constrained regards property 3 (under construction) as there is a time limit on disposal of other PPOR (this too may become subject to CGT if you faff around for too long) – refer ATO.
thanks for the feedback guys
Guys, I have a reverse situation: Property One – Purchased in Dec 2006 and I lived their with my partner until Feb 2008;Property Two – Purchased in Jan 2008; and moved-in in Feb 2008 Now want to sell the Property One. What would be my best option? Use Property One as PPOR until its sold (as CG is higher there) and start using my current residence as PPOR once the property One is sold? Do you need to get the Property Two revalued (by a local valuer or real estate agent) around the time I have sold Property One so that I have some proof of market price when the property was converted into PPOR.
And adding another layer of complication, what base value I’ll be using if I decide to subdivide the Property Two (just separate part of land, build a small dwelling) and sell the new dwelling. And I’m assuming that I’ll be entitled for 50% CGT discount upon the sale of this dwelling and will be able to receive 100% CGT concession if I sell PPOR after living there for minimum 12 months (from the date Property One was sold).
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