Viewing 9 posts - 21 through 29 (of 29 total)
  • Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,190

    if not audited then no problem. If audited you would need evidence you lived there.

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
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    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of propertyboypropertyboy
    Participant
    @propertyboy
    Join Date: 2008
    Post Count: 216

    But is water, electricty and internet in my name enough to prove I was living there?

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,190

    Does the electricity and water show any usage?
    What about photos?
    drivers licence?
    electoral roll
    internet connection
    mobile phone bill showing location
    Evidence in the form of affidavits or stat decs if need be by other family members, neighbours etc.
    It will come down to how thorough the audit is.

    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 propertyboypropertyboy
    Participant
    @propertyboy
    Join Date: 2008
    Post Count: 216

    The water, gas and electricity show usage but I always had my mail sent to a PO Box. THe bills were in my name and I paid for the usage however.

    • This reply was modified 2 years, 2 months ago by Profile photo of propertyboy propertyboy.
    Profile photo of propertyboypropertyboy
    Participant
    @propertyboy
    Join Date: 2008
    Post Count: 216

    Here is an article I wrote a while back:
    The short answer is that you get some CGT relief as the period subject to CGT is apportioned.
    Example
    Bic Dong purchased a home in 2000 and moved in straight away. It is a small residential block and is his main residence and only property.
    On 01 Jan 2004, Bic moves out. He ends up renting a property while renting out his main residence. Mr. Dong then sells the property in 2015.
    What happens with the main residence exemption? Because Dong was absent for more than 6 years – he was away for 11 years in total.
    Bic must first work out the value of the property when it was first used to produce income which occurred on 01 Jan 2004. He can do this by employing a valuer who will estimate what it was worth back at that point in time.
    Then he must work out how long the property was rented for (in days to be exact). 2004 to 2015 is 11 years (approx.). 6 of those 11 years are able to be counted as the main residence. Therefore 6/11th of the gain will be exempt and 5/11ths will be subject to tax.
    Let’s add in some values:
    2000 $200,000 purchase price
    2004 $300,000 value at the date he moved out
    2015 $800,000
    The capital gain to work the tax out on is $800,000 – $300,000 = $500,000
    Some expense can be used to reduce this – agents fees on sale, conveyance on the sale etc, but not stamp duty on the purchase or other purchase costs because Bic is deemed to have acquired the property in 2004 at its value then (s118-192 ITAA97). Also, capital works deductions would need to be added back.
    Assuming all these amounts to $30,000 the gain would be $480,000
    Then the 50% CGT discount will be applied. $480,000 x 50% = $240,000
    Only 5/11ths of this would be taxable = $109,090
    $109,090 is the taxable gain that would be added to Bic’s other taxable income for the year. The maximum tax he would pay on this would be $53,454 but he may pay much less if his other income was very low.
    Had Bic moved back in before 01 Jan 2010 and then later moved out again, he would not have paid any CGT tax. He didn’t do this because he didn’t want the hassle of having to move.
    Had Bic decided not to keep claiming the property as his main residence after moving out (e.g. because he claimed another property) then the cost base for CGT purposes would have been the value at the time of moving out which was $300,000
    The CG would have been $800,000 – $300,000 = $500,000
    Reduce this by the selling costs of $30,000
    $480,000 gain
    $240,000 after applying the 50% CGT discount because held longer than 12 months.
    Tax would be less than $240,000 x 49% (top rate plus Medicare) = $117,600
    See
    ATO ID 2003/1113
    Income Tax
    Capital gains tax: main residence exemption – interaction between the ‘absence’ rule and the ‘first used to produce income’ rule
    ATO ID 2003/1113 – Capital gains tax: main residence exemption – interaction between the ‘absence’ rule and the ‘first used to produce income’ rule
    Section 118-192 of the Income Tax Assessment Act 1997
    INCOME TAX ASSESSMENT ACT 1997 – SECT 118.192 Special rule for first use to produce income
    Section 118-145 of the Income Tax Assessment Act 1997
    INCOME TAX ASSESSMENT ACT 1997 – SECT 118.145 Absences

    What would happen if Bic moved back in after 01 Jan 2010, say 01 Jan 2011. Does he have to apply 1/11 or 4/11 to his gin?

    That is, if you are absent for more then 6 years but move back in again, can you get benefit of a new 6 year period from the moment you move back in again?

    • This reply was modified 2 years, 1 month ago by Profile photo of propertyboy propertyboy.
    Profile photo of propertyboypropertyboy
    Participant
    @propertyboy
    Join Date: 2008
    Post Count: 216

    I think this may be the one King referred to which is in the legislation:
    =
    Example: You live in a house for 3 years. You are posted overseas for 5 years and you rent it out during your absence. On your return you move back into it for 2 years. You are then posted overseas again for 4 years (again renting it out), at the end of which you sell the house.
    =
    Yes this main residence could get the full exemption – provided it meets the other requirements.

    What about this scenario:

    You live in a house for 3 years. You are posted overseas for 7 years and you rent it out during your absence. On your return you move back into it for 2 years. You are then posted overseas again for 4 years (again renting it out), at the end of which you sell the house.

    Total period of ownership is 16 years.

    Do you apply 1/16 in this scenario or 7/16?

    So at the point where you are away for 7 years, does the 6 years resent again after year 10 or does it no longer reset once you have been away for more than 6 years?

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,190

    The period it wasn’t the main residence appears to be 1 year so 1/16

    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 propertyboypropertyboy
    Participant
    @propertyboy
    Join Date: 2008
    Post Count: 216

    Assuming a house qualifies as a PPOR, for each interval that it is rented out for >6, then you move back in, then rent it out for another interval >6 years, on each interval it has been rented out >6 years does the 6 year exemption apply to that interval or does it wash away completely once it has been rented out >6 years.

    Reason I ask is because:

    1. I purchased a house in October 2009

    2. Lived in it for 18 months to April 2011

    3. Rented it out for another 2 years to April 2013

    4. Then lived in it for 6 months from April 2013 to October 2013

    5. Has now been rented ever since October 2013.

    If I move back in say October 2021, and sell it, (total hold period of 12 years) is the portion that would be taxable 2/12? I can live with this but would really hope I could get the full 6 years at point 5 and hope it doesn’t wash away as I have been there for >6 years

    • This reply was modified 2 years, 1 month ago by Profile photo of propertyboy propertyboy.
    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,190

    How many years was it not the main residence? Sounds like 2 years so 2/12ths.

    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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