All Topics / Help Needed! / FHOG and CGT upon selling?

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  • Profile photo of js2js2
    Member
    @js2
    Join Date: 2003
    Post Count: 758

    When buying a property using the FHOG and then selling the property, after the required period of living in it. Does the first home owner have to pay any Capital Gains Tax?

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    Profile photo of Mortgage HunterMortgage Hunter
    Participant
    @mortgage-hunter
    Join Date: 2003
    Post Count: 3,781

    There is no CGT payable on the PPOR.

    If you rented it before you moved in or owned another home in the meantime there may be a CGT liability.

    Cheers,

    Simon Macks
    Interest Free Home Loan Agent
    http://www.mortgagehunter.com.au
    0425 228 985

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    Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

    Profile photo of ShusharShushar
    Member
    @shushar
    Join Date: 2003
    Post Count: 190

    According to the ATO website (http://www.ato.gov.au/individuals/content.asp?doc=/content/20427.htm&pc=001/002/026/003&mnu=1051&mfp=001/002&st=&cy=1), the following are exempt from capital gains tax –
    Exemptions and exceptions
    Generally speaking, you disregard a capital gain or capital loss on:

    • an asset you acquired before 20 September 1985
    • cars, motorcycles and similar vehicles
    • compensation you received for personal injury
    • disposing of your main residence. This can change depending on how you came to own the residence, whether it is on more than 2 hectares of land and what you have done with it—for example, if you have rented it out, you may be liable to some tax when you sell it
    • a collectable—for example, an antique or jewellery—if you acquired it for $500 or less
    • a personal use asset—for example, items such as boats, furniture, electrical goods and household items used or kept mainly for personal use or enjoyment—if you acquired it for $10,000 or less. You also disregard any capital loss you make from a personal use asset, irrespective of the cost
    • the exchange of shares and units you own in a company or trust that is taken over if certain conditions are met
    • shares in a company or interests in a trust where there has been a demerger and certain conditions have been met, or
    • disposing of an asset to which the small business 15-year exemption applies. There are a range of concessions that allow you to disregard part or all of a capital gain made from an active asset you use in your small business. For more information see Guide to capital gains tax concessions for small business (NAT 8384-5.2003).

    I’m sure that whether you are a FHO or not is irrelevant.

    Regards,
    Shushar

    “All our dreams can come true, if we have the courage to pursue them.” – Walt Disney

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213

    You know why that cars are exempt?

    Because they go down in value, which would mean everyone would have Capital Losses!

    Terryw
    Discover Home Loans
    Mortgage Broker
    North Sydney
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    Profile photo of js2js2
    Member
    @js2
    Join Date: 2003
    Post Count: 758

    Thanks for your replies.

    Simon, I maybe getting in contact with you soon [wink].

    And just a follow up question!

    The scenario of buying and applying for the FHOG, and then renovating the property and re-selling 12-24 months down the track and profiting say, 40k. That would attract no CGT? Yeah?

    Profile photo of ScreminScremin
    Member
    @scremin
    Join Date: 2003
    Post Count: 448

    JAffasoft,
    We have done that. Bought using our FHOG, are currently renovating and may sell or rent out in the near future. Our property has gone up $40K already and it isn’t even finished!!!

    From what we have researched, no there shouldn’t be any capital gains.
    Steph.

    Success is 1% inspiration and 99% perspiration.

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