Hi,
Would some one please let me know if you have to pay capital gains for this situation:
I have 5 houses in WA, all tenanted since bought. I stayed in my first one for 3 months and then rent it out as I moved in with my girl friend. My accountant told me that if I sell that first one this coming financial year, since I had it for nearly 6 years, I don’t have to pay capital gains as it can be counted as PPOR.[
]Your advice would be appreciated.
Thanks.
I am in a similar situation. I owned the house for 7 years, during the period I rented it outfor 3.5 years. I have been getting conflicting information regarding this 6 year rule thing. one accountant says i will need to pay CGT if I sell, other accountant reckon it doesn’t attract CGT if i sell.
Any help/Advise would be much appreciated
maybe cgt is payed pro rata for the amount of time you rented it out..
just guessing
[
]CGT is pro rata. Your accountant is incorrect to say it is CGT free.
Hi Hamster. My understanding is that if you sell, you will pay pro-rata as stated. It should only affect the period in which the house was rented out. Also, any renovations etc can (I believe) be deductable from the CGT. Get an accountant that knows about property investing.
All the best
MartyHi Hamster,
My WA accountant said the same thing to me – I didn’t pay too much attention to the details, because I’m not planning to sell until after I retire. I think there’s a technicality in the ITAA which gives you some CGT exemption.
It’s definitely worthwhile checking it out before you do anything, because you’ll probably have to ensure that you structure it properly.
Cheers
MI posted about this about a month ago somehwere here.
There is a little rule in the tax act that allows you to rent out your PPOR for up to 6 years and still claim it as your PPOR. So if you have lived in a property as your home, then rent it out, then sell it before 6 years since the date of living in it is up, then you do not have to pay any CGT if that was your only PPOR.
Threfore, Hamster, I beleive your accountant is correct-you will not have to pay CGT.
ps I am NOT an accountant.
Terryw
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Terry wow learn something every day. So what about if you move back in for a year, then rent it out again for 5 years then sell ? Would you have to pay CG then, as you moved back in and it became you PPOR again for a period before you rented it out again.
hw007
I beleive the 6 years starts again if you move back into teh property.
Speak to an accountant-not just any, find a good one.
Terryw
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hamster et al.,
Terryw knows, but forgot to mention in this post (look for his earlier one), that you can only nominate one PPOR at a time. You should work out which property you own is likely to have the greatest CG, and nominate that one!
This topic was also discussed on the Somersoft forum some months ago, I think in the ‘Accounting’ section.
TerryTerence McMahon
HomeWin
Finance
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