The mortgage crunch has finally got us and we are moving out of our home and into my husband's father's house, rent free.
We are going to rent out our home. I plan to get a tax depreciation schedule done by eofy, but do I need to get a valuation on the house as well or can it be estimated later for CGT purposes? We are cash strapped and at $440 for the valuation and $495 for the schedule (Herron Todd White) it's a bit much. What is the time frame on getting them done and do I need a valuation at all – I didn't get one for my last home which then became a rental prop.?What does your council rates notice say your property is worth as they are reviewed every two years just add the land value plus the site improved value. The reason you need a valuation is to work out a new cost base from the moment your house went from PPOR exemption for CGT to non exemption CGT status when you rent out the house. This is so you only pay for the capital gain you made from the moment you rented the house out to when you either sell the house in the future or move back in as PPOR (another valuation needed to cover CGT).
If you have a record of the valuation at this renting out change you can use it later down the track to pay only the CGT tax for the income producing time period.I haven't tried this but some real estate agents offer a free valuation to try and get you to sell your house through them.
If memory serves me correctly you have a number of years in which to live in your father's house and still be able to claim the RROP exemption against your own home.
Quote from the ATO website: see link
If you do use the dwelling to produce income – for example, you rent it out or it is available for rent – you can choose to treat it as your main residence for up to six years after you cease living in it.
That is, the property will be CGT free if you sell it within six years of moving out.This is a complicated area of tax law though, so I recommend getting good advice.
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Vals can generally be arranged within 5 days of recieving instructions – there are plenty of valuers around, check out the australian institute of property's website for contacts.
PS only a valuer can give you a valuation, real estate agents can provide an appraisal (big difference).
Hello Soloinvestor
It will also stay CGT free if you move back in within the 6 year period assuming you don't buy another place and declare it as your PPOR within that time.
Maybe you can ring the ATO to confirm all this.
Hope this helps
ElkaCan I still claim depreciation on the property while it's being rented out, assuming that I'm going to move back in within 6 years to avoid CGT liability?
soloinvestor wrote:Can I still claim depreciation on the property while it's being rented out, assuming that I'm going to move back in within 6 years to avoid CGT liability?Yes, you can.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
