Oops, Sorry I misunderstood.

Maybe there are still ways to reduce CGT by moving the assets into the hands of the lwoer income spouse before the final sale?

HDTs are looking very unstable at the moment, some deeds will definitely fail the interest deductibility aspect with the ATO. So best to avoid at the moment. Anyway, as Richard alluded to, they are only good when a income loss will be incurred,

Hi

I am not sure how those trusts could last more than 80 years. Maybe a resettlement like Cata suggested.

We could be causing problems for our decendants. Remember years ago people used to issue life tenancies to the surviving spouse. Usually the man owned the property and the wife got a life tenancy. But sometimes, or often, the wife needed to sell the property to get enough funds to move into a nursing home – but she couldn't. This costly problem needed to go to court to get resolved.

Yes, it is true to a certain extent at least. The family assets can be transfered between spouses without CGT, but I believe that teh CGT consequences remain – it is as if the receiving spouse had the asset the whole time.

So those contemplating divorce, or a separation should be careful about which assets they receive. One getting the former main home may have a exempt asset, while the one receiving an investment property may be hit with a huge CGT bill down the track.

Hi Joel

A
I believe you would probably qualify for the grant as long as you live in the place within the first 12 months.
CGT – you would be charged on the growth during the first 11 months, and half the growth from there on. If you rent one room out and declare it, then you lose full exemption and can only claim it on the share you are living in.

B
I think you would get the grant, but again only get CGT exemption on 50% of the property – ie the share you are living in.

Annyong Adrian

I am not exactly sure what you mean!?

Under s118-145 of the ITAA you can claim one property as your main residence for up to 6 years after you move out. Becoming a non resident does not come into it. Maybe you are referring to a different section of the Act, of which I am not aware?

If you were to sell one property, then you could claim the exemption on the next one too, but I think you would have to live in it first.

P_retired.

The LOC Probably would be cheaper, but not many go to 90% LVR.

Another option would be to borrow 90% IO and put 10% in an offset account with the repayments coming from this.

Terryw
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I am not an accountant, but think it is worked out roughly like this:
Selling Price, $520,000 minus Value at time of renting, $490,000 = $30,000 capital gain.

From this capital gain you can minus purchase and selling costs such as stamp duty, agents fees and legals.

I am not sure if how they would need to be portioned, but maybe it would be a % based on the time the property was available for rent.

You may also have the option of still claiming the old place as your main residence and not having to worry about CGT at all. This will depend on whether you wish to claim the new property at the same time too.

Terryw
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Really, its not that difficult a concept.

Interest on money borrowed for investment purposes is deductible!

Simple really.

Terryw
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Most people do not udnerstand these sorts of loans. It basically is just capitalising part of the interest. ie you only pay part now, and the rest is added to the loan. So unless you have high growth, then you will be going backwards.

There is also a risk the ATO could disallow the interest deduction on the capitalised component.

Terryw
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