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  • Profile photo of ORSMORSM
    Participant
    @orsm
    Join Date: 2009
    Post Count: 11

    Hi guys,

    I have a question about CGT, if you live in a house for 3 years and then decide to move out and rent it out for 2 years do I pay GCT from the 5 Years or the start of the time the place has been rented out for so being 2 years?

    Profile photo of ORSMORSM
    Participant
    @orsm
    Join Date: 2009
    Post Count: 11

    Also how is CGT calculated?

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,173

    In this situation the CGT could be totally exempt. Under the main residence absence rule. s118-145 ITAA 1997.

    It would depend on your circumstances though.

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

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of ducksterduckster
    Participant
    @duckster
    Join Date: 2004
    Post Count: 1,674

    Be careful as you can only claim one property at a time as your main residence. So if you moved into another house but deemed to treat the original house as your main residence s118-145 iTAA 1997 you cannot as they coin it double dip by trying also to claim house number two as a main residence.
    see
    http://www.ato.gov.au/corporate/content.aspx?doc=/content/86191.htm

    Profile photo of ducksterduckster
    Participant
    @duckster
    Join Date: 2004
    Post Count: 1,674
    ORSM wrote:
    Also how is CGT calculated?

    http://www.capitalgainstax.com.au/capital-gains-tax-calculator.htm

    it is complicated to explain. joint ownership you split the capital gain 50% each owner

    >12 months ownership from contact dates not settlement dates then another 50% discount

    Then cost base has to be considered to subtract from the final profit
    http://www.ato.gov.au/corporate/content.aspx?doc=/content/36557.htm

    But you can't double dip on this soas an example if you rented and claimed interest costs against rent each year then you can't claim interest costs as a holding cost on cost base.

    what ever is left is added to your margin tax income to calculate what tax you will pay.

    Profile photo of TalismansTalismans
    Participant
    @talismans
    Join Date: 2010
    Post Count: 23

    Hi All,

    After you move out of the PPOR and want to rent out the property, do you still need to direct all mails to the address to use the 6 years CGT exemption rule?

    Cheers
    Talismans

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,173

    The section in the tax act, s118-145 ITAA, allows you to be legitimately absent from your property and legitmately renting it out. No need to have the mail go there if you don't live there.

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

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of ORSMORSM
    Participant
    @orsm
    Join Date: 2009
    Post Count: 11

    I have owned a unit for 6 years, bought it for 267k. According to rpdata.com, it’s automated value is 320k. So the gain is 53k. So how much tax is payable or I can get away from paying the CGT by following the act above.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,173

    You should see your accountant as it is possible you may pay no tax.

    But assuming the absence rule doesn’t apply, then it is worked out roughly like this:

    Sale price – Purchase price less costs of buying/selling (stamp duty, agents fees, legals etc) plus any depreciation claimed.

    $320,000 – 267,000 = $53,000 less costs, say $15,000 plus depreciation claimed, say $5,000 = $43,000

    As you have held it more than 12 months you will get the 50% discount, so this is reduced to $21,500

    This is added to your other income, so the max tax you would pay would be around half = $11,000 apprx

    Very rough figures though.

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

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

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