Hi,
My partner purchased a town house in Melbourne as her PPOR in 2005. She lived in it for 1 year and then moved to Sydney with me. She has rented her place since 2006. What's the 6 year rule for CGT? I am thinking if she sells this before the 6th year of not living in it, then it will be free of CGT. Is this correct?Not necessarily.
Are you buying or renting your home?
If you are buying, and your partner is living with you in a domestic relationship (married or defacto), you can choose to have different main residences.
BUT, if you do, YOU would be up for a portion of CGT on your PPOR, as (I presume) you own more than 50% of the home. Your partner would also be up for a portion of CGT on their IP.
http://www.ato.gov.au/individuals/content.asp?doc=/content/36893.htm
From my reading of this info, your partner would be better off to call your home the PPOR for both of you, and then pay the portion of CGT from when the property first received income. This way, your home is 100% exempt.
Thanks for the info. Currently we are actually renting and the lease is in her name only. I have allocated my PPOR to another property (land tax purposes) that i own. We are not buying anything, but I thought (was under the understanding) that if she was to move back into her property prior to 6 years and live there for another year then sell, it would be CGT free. However what if she does not move back there and sells it prior to 6 years of renting it out?
dannyde wrote:Thanks for the info. Currently we are actually renting and the lease is in her name only. I have allocated my PPOR to another property (land tax purposes) that i own. We are not buying anything, but I thought (was under the understanding) that if she was to move back into her property prior to 6 years and live there for another year then sell, it would be CGT free. However what if she does not move back there and sells it prior to 6 years of renting it out?Ok. If you are renting, then yes, it can be CGT free, because she only has the one PPOR (the one being rented out).
She doesn't have to move back in prior to selling, as long as the property is sold within 6 years of being rented. If it is sold within 6 years, it would still be her main residence, and be CGT free.
Thank u, my thinking was correct.
Sorry to jump in, but can I clarify something here.
dannyde said that he has PPOR on his own, therefore both of them own two properties, so if his partner is selling her PPOR she doesn't have to pay CGT is it? and vice versa if dannyde selling his PPOR he doesn't pay CGT given same example.
sorry for my English
That's the way i see it. As we are currently renting, both of our PPOR are being rented out to others, however if we sell these PPOR within 6 years of moving out, it should CGT free!
Couples only get 1 main residence between them. So if a husband and wife (or defacto) have one each, they can only claim the exemption on 1 at any 1 time.
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
dannyde wrote:That's the way i see it. As we are currently renting, both of our PPOR are being rented out to others, however if we sell these PPOR within 6 years of moving out, it should CGT free!Danny, from further reading, the ATO state that couples can only have one PPOR at a time, so, even though you are renting at the moment, only one of your current houses would be considered your PPOR.
If you each choose your own properties as your PPOR, you would be required to pay a portion of CGT on the sale. The legislation does not discriminate between renters and owners.
If you each chose your own properties as your PPOR's, you would be required to pay 50% CGT (less the discount, if applicable) covering the time you have been living together. You would not include time that you were not living together in your CGT calculations.
Yes ofcourse we can only have 1 PPOR.
I just found out that my partner was living in her place for only 10 mths (not 12mths) before she moved out and moved in with me. Is this a problem if it's not a full12 mths of living in her PPOR?
There is no min period specified for a property to be a main residence.
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
thank u very much for your help.
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