CGT, 6 year rule and two properties sold in same FY

Always advisable to get advice in this sort of situation before taking action….. not sure 6 year rule applies if you buy another PPR.   If you rent out your PPR and go overseas then you have a 6 year window before you have to pay CGT, but if you buy another PPR you may lose the 6 year benefit.   If this were not the case everyone would be doing it!!!!!    This is general info only and as I say best to get advice from an accountant who understands real estate before taking action in future….

CeeGee, I suggest you request a private binding ruling with the ATO (or get your tax-agent to do it).  Sample application forms are on their website.  The ruling is binding on the ATO so you know when you lodge your appropriate tax return (eg if you need to offset any capital loss against any future capital gain), you have that private binding ruling as your back up.  Use plain English and provide full details.

Just remember to keep the ruling until you need it. The ruling is personal and applies only to you.

It is the safest way to go and gives you certainty.

Peter

ceegee123 wrote:

Just checking that I’ve understood things correctly and that PPOR1 can be treated as our main residence, while paying no CGT and claiming a capital loss for PPOR2.

• PPOR1 bought June 2011 for $370k. Lived in it until Sept 2018 when it was rented out. Sold in May 2023 for $450k.
• PPOR2 bought Sept 2017 for $575k. Rented out for one year until Sept 2018 when I moved into it. Sold in August 2022 for $535k.

Can I elect to treat PPOR1 as my PPOR for the entire period of Sept 2018 to May 2023, and pay no CGT (and claim a capital loss for PPOR2)?

In Australia, you can claim a property as your principal place of residence (PPOR) and potentially exempt it from capital gains tax (CGT) if you lived in it before renting it out, using the ‘six-year rule’. For your scenario, if PPOR1 was your residence until September 2018 and you sold it within six years while not claiming another property as your PPOR, it qualifies for a CGT exemption. As for PPOR2, since it was rented out before you moved in, it wouldn’t qualify for the CGT exemption during the rental period but can claim a capital loss if sold for less than its cost base.

Consulting a tax professional is essential to navigate these rules accurately and ensure compliance with the Australian Taxation Office (ATO) guidelines, especially regarding your ability to claim CGT exemptions and capital losses correctly.

• This reply was modified 7 months, 3 weeks ago by  Leroysane.

Sako wrote:

On the topic of CGT 6 year rule. My question is, how does someone apply for such exemption when lodging taxes ? ie: is it a form that the accountant submits or is this a tick in the mygov website when lodging tax return ? I lived in my PPOR from July 2017 until March 2019 and then I rented it out. I sold it in 2023.
Regards: Roof Replacement Arlington Va

To claim the CGT 6-year exemption when lodging your tax return, simply report the sale in the Capital Gains section and indicate that the property was your principal residence prior to renting it out. No special form is required if you’re using MyGov; just fill out the sections accordingly. If an accountant is managing your taxes, inform them of the property’s timeline as your principal residence and as a rental. Ensure you keep records of your residency and rental periods for documentation. This will support your eligibility for the exemption if the property was rented for less than six years after moving out.