I purchased my first PPoR in Ipswich for $84,000. Around two years later I moved out and had a valuation done by a Real Estate Agent at that time which came in at $215-230k (Over the odds at that time if you ask me but that is what they said).
I have now had the property for approx 5 years.
What is my CGT liability should I sell now? What is my CGT liability should I want to sell in another 5 years?
Thanks so much for your help! This is a fantastic site for a beginner like me.
It all depends.
it could be nil if you do not own any other property.
You need to tell us what it is worth now too? or what you can sell it for?
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
Sorry Terry.
Yes I own another property in the ACT and the Ipswich house has been an IP since I moved out of it in 2004. I guesstimate it would now sell for $220-240K.
Is the ACT house your PPOR? If so then you would be looking at CGT on the Ipswich property being;
selling price net of selling costs, less the market value of the property when it started producing income. Less 50% CGT discount. This amount, if a net capital gain, is added to your taxable income. If a loss, is offset against other capital gains or carried forward.I would be suspect that the Real Estate agent valuation is not correct, otherwise the property value hasn't risen in 3 years? and it is not a valuation that you could rely upon anyway. You would need to get a qualified valuer/quantity surveyor to value the property when it started producing income to rely upon the value. Or at least get some other evidence of a reasonable valuation for the property at that time.
Thanks trajik!
I believe the house was probably worth somewhere around $180k when I moved out. but what sort of evidence would I require to make that a 'taxable valuation' if you know what I mean? Unfortunately it is a bit too late for me to get a qualified valuer to do it now…. one of the classic newbie mistakes I suppose!
Hello Mark
Rather than repeat it here is a link to a similar thread which is worth your reading.
https://www.propertyinvesting.com/forums/getting-technical/legal-accounting/4322421
Even though the time element is different I believe that for up to 6 years from the time you started renting out your old PPOR, the principle is the same but naturally check with your accountant.
Hope this helps
ElkaThanks very much everyone for your help!
Mark, You need to be able to make a reasonable valuation, so either getting the actual selling prices of similar properties in the area sold at around that time as evidence, or a quantity surveyor may be able to help with the valuation. They are qualified to make an informed valuation. Also, as Elkam has alluded to, you may be able to use the 6 year absence PPOR exemption which will make the CGT nil, but remember that you can only have this exemption on one property at a time, so it is usually best to choose the property with the highest capital gain, or potential capital gain.
Ross
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