Hi all
how long must you live in a house/unit before it,s classified as your home and therefore don,t have to pay capital gains tax?
cheers lynnemNot entirely certain, but for some reason 12 months rings a bell. Best to check with your accountant, they should know.
Manda
I think there have been some changes to tax law so that if you ever rent a house out, you cannot avoid CGT. It will be based on how long the property is held so if you live in it for 1 year and rent it for 4 years – CGT would be 80% of the capital gain (less 50% reduction for holding over 1 year). Effectively 40% on the example above.
LYNNEM
Hi I ask these questions of my accountant all the time Note- I’m not a proffessional but I think-* You must own the property for at least 12 months to claim a 50% CGT exemption.
* If the property is your PPOR for that time CGT exempt.
* if PPOR and IP it is pro-rated (as polar bear stated) to the proportion of the time it was an IP
Hope this helps.T.
I am not an accountant, but I beleive a time period is not stated in legislation and you should be able to claim a house as your PPOR if you live in it for just one day. But you can only have one PPOR per family (or 2 for a short period to allow moving). You can also be absent from your PPOR for a period of up to 6 years, rent it out and pay no CGT. Check this with a GOOD accountant.
Terryw
Discover Home Loans
North Sydney
[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
I am not an accountant, but I beleive a time period is not stated in legislation and you should be able to claim a house as your PPOR if you live in it for just one day. But you can only have one PPOR per family (or 2 for a short period to allow moving). You can also be absent from your PPOR for a period of up to 6 years, rent it out and pay no CGT. Check this with a GOOD accountant.
Terryw
Discover Home Loans
North Sydney
[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
the information from my accountant was that I had to make a genuine attempt to make the property my main place of residence. ie: change your voting addy, have utilites connected in your name. You can then sell it 2 days after you move in if you want with no capital gains. As long as the taxation office don’t believe you are doing it regularly for the sole purpose of making money. Example: Two days after a friend moved into their new home her husbands kids came to live with them…they had to sell and find a larger home… They turned the house over in 1 month…no CGT.
Hi Tuttsy, as far as I know you will always pay CGT if you used the property as an investment property. Pro-rata based ofcourse.
Blackhole.
You can still rent out your PPOR for up to 6 years per time and pay no CGT. see the example in this Tax Determination:TD 95/9
http://law.ato.gov.au/atolaw/view.htm?docid=TXD/TD959/NAT/ATO/00001Terryw
Discover Home Loans
North Sydney
[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
Hi all
thanks for the replies.thinking of hitting the road permanatley buying props doing quick reno,s selling and moving on.if l do l shall get myself a good laptop and keep login onto this site maybe even too pass on good oportunities to others.
cheers lynnem
THERE IS ONLY ONE STUPID QUESTION AND THATS THE ONE YOU DON,T ASK.Hi lynnem
Not a bad strategy, but the ATO will look at it as a business if you do it too often. I would recommend – if you are doing it with a partner, alternating name on title for each one that you do. This may then mean that there is one in your personal name every couple of years, and doesn’t ring as many alarm bells.
Cheers
MelHi Lynnem,
Terry has answered your question.
I just wish to add that I have proven Terry’s correct advice through my accountant for my lady friend. A convoluted determination over her ownership of two houses and fragmented leasing, led to the 6 year rule.
This also provided her with a tax refund of $4,500 as opposed to her previous accountants advice (not up to date), of a refund of only $250.
One last point, apart from getting a good accountant. Remember that any laws passed also apply to those whom pass them. e.g. Houses owned prior to 20 Oct ’85 and subsequently sold would not attract CGT, regardless of rental. CGT used to be indexed to inflation, but is now just cut in half for tax apportionment.
Regards, Phil
The topic ‘C.G.Tax how long must you live in house’ is closed to new replies.
