All Topics / Help Needed! / CGT – Main Residence Rule

Viewing 6 posts - 1 through 6 (of 6 total)
  • Profile photo of bevo01bevo01
    Participant
    @bevo01
    Join Date: 2009
    Post Count: 8

    Hi,

    I apologise in advance if this has been asked before but I tried to troll through all the CGT questions and couldn't find this particular answer.

    I have a property that I'm going to put on the market.  I brought the house about 3 years ago and lived in it while renovating.  Last July I moved into my partners house and started renting my place out.  At the moment this is the only property that I own – ie I don't have another PPOR.  I know that for up to 6 years I have the option of claiming this property as my main residence but I was under the impression that I had to actually move back in to do this.  However I was looking on the ATO website and there's the following example which to me doesn't read as though this is true:

    Choosing to stop the period covered by the choice early

    James bought his home in Brisbane and moved in immediately. One year later he moved to Perth and rented out his Brisbane home. Five years later James bought and moved into a new home in Perth . He sold the property in Brisbane later that year. In completing his return for that year, James decided to continue to treat the Brisbane property as his main residence after he moved out of it but only until the date he purchased his new main residence in Perth.

    Does anyone know if I have to actually move back into the house (or at least be seen to by connecting electricity etc) in order to get an exemption from CGT?  Just need to know if I need to wait to get the tennant out before putting it on the market or not.

    Thanks for your help. 

    Profile photo of crjcrj
    Participant
    @crj
    Join Date: 2004
    Post Count: 618

    Does your partner own the house you are living in?  If so, you ahve three options:

    a. you both agree that your house is the PPOR for the 6 years from when you moved out and your partner loses PPOR status on your partner's house

    b. you both agree that your partner;s house is the PPOR and you lose PPOR status on your house from when you and your partner moved in together

    c. each house is 50% PPOR

    Profile photo of bevo01bevo01
    Participant
    @bevo01
    Join Date: 2009
    Post Count: 8

    Well actually no, he doesn't own the place we're in now but is looking – maybe we should hold off.

    Say he was not a factor at all and I was just selling my house and renting elsewhere – would I have to pay CGT?

    Thanks for the reply!

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

    my understanding is that the property can only be claimed as a main residence once you have lived in it. If you then move out, and are not claiming another place as your main residence, then you have CGT exemption for up to 6 years,

    There is no requirement that you have to move back into the property (to my knowledge).

    see the tax legislation at http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s118.145.html

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of johnminajohnmina
    Member
    @johnmina
    Join Date: 2009
    Post Count: 17

    So does this mean as long as you dont have another property as a PPOR you can rent it out and if you choose to sell it within 6 years you wont have to pay CGT on it?

    johnmina

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

    i think so

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

Viewing 6 posts - 1 through 6 (of 6 total)

You must be logged in to reply to this topic. If you don't have an account, you can register here.