All Topics / Legal & Accounting / Capital Gains Tax

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  • Profile photo of JleeJlee
    Member
    @jlee
    Join Date: 2008
    Post Count: 5

    Is there someone (preferably with accounting/taxation background) out there who can advise on CGT in the following situation:
    I'll be moving out of my own house (only prime residence) to live in my daughter/son-in-law's house, for about 2 years, as they'll be overseas. I intend to rent out my own house during this period. Just before they return to Australia, I intend to sell my house and use the money to buy a smaller house and move into it. Do I have to pay CGT on my (first) house?

    Jlee

    Profile photo of Dan42Dan42
    Member
    @dan42
    Join Date: 2008
    Post Count: 619

    No, as you will still qualify for the main residence exemption, for up to 6 years.

    Profile photo of lifeXlifeX
    Member
    @lifex
    Join Date: 2004
    Post Count: 651

    I am not qualified to answer this … however.

        I understand that the CGT exemption can be applied for the period you owned the house.

      So , if you have owned it for 8 years and then rented it out for 2 years.

      You would have an exemption for approx. 80% of the capital gain you made, depending on the CPI for this period.

     

    Profile photo of JleeJlee
    Member
    @jlee
    Join Date: 2008
    Post Count: 5

    Thanks, Dan42. But do I qualify for 100% CGT exemption (when I sell my property) or only partial?

    Dan42 wrote:
    No, as you will still qualify for the main residence exemption, for up to 6 years.
    Profile photo of JleeJlee
    Member
    @jlee
    Join Date: 2008
    Post Count: 5

    Hi lifeX, I've also heard the same (as mentioned by you). On the other hand, I've also heard that I could perhaps get 100% exemption as long as I don't claim any other property as my main residence during the period that my house is rented out. This is so confusing!

    lifeX wrote:
    I am not qualified to answer this … however.

    I understand that the CGT exemption can be applied for the period you owned the house.

    So , if you have owned it for 8 years and then rented it out for 2 years.

    You would have an exemption for approx. 80% of the capital gain you made, depending on the CPI for this period.

    Profile photo of Dan42Dan42
    Member
    @dan42
    Join Date: 2008
    Post Count: 619

    In your situation, you will qualify for the 100% main residence exemption, if it is sold in 2 years as you plan, because:

     – Your house was your main residence before you moved out.
     – You are not buying another main residence (you are moving into your daughter's house)
     – You are planning on selling in less than six years.

    Dan

    Profile photo of WJ HookerWJ Hooker
    Participant
    @wj-hooker
    Join Date: 2007
    Post Count: 272

    Dan42,
                 Is there a requirement for Jlee to actually move back into house before selling ?? You always here the saying that you can move out for up to 6 years and then move back in to not pay CGT.

    Profile photo of eddieceddiec
    Member
    @eddiec
    Join Date: 2004
    Post Count: 113

    No, you don't have to move back in.  The law says as long as it was your main residence before you moved out, you have up to 6 years to continue treating it as your main residence even though you are renting the property out, provided that you don't own another main residence elsewhere.

    Eddie
    [email protected]

    Profile photo of Dan42Dan42
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    @dan42
    Join Date: 2008
    Post Count: 619

    WJ,

    There is no requirement to move back in to the house in this situation.

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