Selling the house next door to youre PPoR,
at the same time as selling youre PPoR,
to the same person, CGT free?Some say you can and others say not, does anyone know the correct answer?
My computer does not seem to like the ATO website, every time I click on something I get redirected to the home page.
Assuming from your post that they're on separate titles. If the house next door to the PPOR was purchased after Sept 1985 and was an investment property, I'd say that CGT would be due.
Is it an actual house that you rented out whilst living next door in the PPOR? Or, is it a tennis court/pool that (could be argued) you also occupied and enjoyed as part of your residence?
Also, ask your accountant.
You can only have one PPOR – except for a provision for 6 month overlap.
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
As MP said, if it is on another title then it is not your ppor.
Thort it sounded a bit suss.
Anyone read Lance Spicer's "the tax solution"? There is a write up about this in there, page 71.
Says "as long as it the land adjacent is used primarily for domestic or private pourposes in accordance with the dwelling".McNorman
That book is a bit old now I think. Tax laws change rapidly too. I haven't read the book (but would like to)am not sure, but I haven't heard anything like this before. I know that is a provision for acerages whereby the land surrounding the house can be classed as part of the main residence for up to 5 acres – but I had always assumed it had to be one parcel of land, ie one title. Maybe this isn't the case?
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 McNorman
On page 71 of Lance Spicer's book the tax solution it states as follows"LAND next door……" It is only vacant land not another house and there are conditions for it to be deemed part of your PPOR
1. The land is primarily used for domestic or private purposes in association with the dwelling2. The land area does not exceed 2 hectares.
When reading this book one has to be very carefull as to the interpretation of the statements – there is a lot of "spin" in there making things sound better than what they are.
I was astounded at how Mr Spicer time and time again says "your accountant says No, but you can." I am an accountant and believe me we all had a good laugh at the spin he puts on things.
Anne
Hi Anne
Sounds a bit vague doesn't it. Some of Spicers books are years old now and tax rules have changed. Some of the stuff which he promotes or hints out would be illegal too – eg hiding income in tax havens and not declaring it.
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 Terryw
I have attached some reading for you from the ITAA97 regarding this matter. You can do a search on the ATO website on adjacent land and read the legislation for yourself. This expemtion to adjacent land only applies if the PPR and adjacent land is sold at the same time to the same purchaser at the time when you dispose the PPR and if the adjacent land exceeds 2 hectares the cost base of the land must be apportioned.
Cheers
AnneINCOME TAX ASSESSMENT ACT 1997
CHAPTER 3 – SPECIALIST LIABILITY RULES PART 3-1 – CAPITAL GAINS AND LOSSES: GENERAL TOPICS HistoryPt 3-1 inserted by No 46 of 1998. Division 118 – Exemptions HistoryDiv 118 inserted by No 46 of 1998. Subdivision 118-B – Main residence Rules that may limit the exemption
SECTION 118-165 118-165 Separate CGT event for adjacent» «land» or other structures The exemption does not apply to a *CGT event that happens in relation to land, or a garage, storeroom or other structure, to which the exemption can extend under section 118-120 (about «adjacent» «land) if that event does not also happen in relation to the *dwelling or your *ownership interest in it.
Hide history noteView history notes CHAPTER 3 – SPECIALIST LIABILITY RULES PART 3-1 – CAPITAL GAINS AND LOSSES: GENERAL TOPICS HistoryPt 3-1 inserted by No 46 of 1998. Division 118 – Exemptions HistoryDiv 118 inserted by No 46 of 1998. Subdivision 118-B – Main residence Basic case and concepts
SECTION 118-120 Extension to adjacent» «land 118-120(1) This Subdivision applies to land that is adjacent to a *dwelling (if the same *CGT event happens to the land or your *ownership interest in it) to the extent that you used the land primarily for private or domestic purposes in association with the dwelling as if it were a dwelling.
118-120(2) The maximum area of land covered by the exemption (including the area of the land on which the *dwelling is built) is 2 hectares.
118-120(3) For a flat or home unit, this Subdivision also applies to a garage, storeroom or other structure that is associated with it (if the same *CGT event happens to the structure or your *ownership interest in it) as if it were a dwelling. However, it so applies only to the extent that you used the structure primarily for private or domestic purposes in association with the flat or home unit.
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