Hi, I am planning to move into my investment property and turn that into my primary residence (I am currently living with my family).
I have owned my investment property for a good couple years now and have made some decent gains which I refinanced to buy a second investment property…
So if I do move into my investment property and later on decide to sell it, am I eligible for the CGT exemptions?
Thanks!
Yes
s118-185 ITAA97
ApportionmentKeep good records of 3rd element cost base expenses.
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
How long do you need to live in there before being exempt from CGT?
How long do you need to live in there before being exempt from CGT?
It would never be exempt if it was originally an investment property
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
I think Terry is meaning the property will only be exempt from any further value increases from the time you move into it as your PPOR. But you will likely be up for any Capital Gains above original purchase price up until the date you move in. You will likely need to get a valuation as you move in – gains from that value upward would be exempt as it has now become your PPOR.
Terry’s first words mentioned “apportionment” – i.e. you might live in it for the next 50 years, but the portion of time it was a rental would still not be exempt. Of course, if you never sold it, you don’t have CGT to pay anyway (???)
Have I got that right, Terry?
Benny
Not correct Benny
A valuation is only needed if an existing main residence becomes income producing.
In this case an investment property is moved into so a valuation can’t be used.
The CGT will be worked out on the portion of the time that the property was a rental.example.
$100,000 purchase price.
Lived in it for 1 year, then moved in.
If sold for $200,000 after 2 years then 50% of this would be subject to CGTIf sold it for $1mil in year 20 then 1/20th of this gain would be subject to CGT.
So the longer you hold it the smaller the % would be.
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
Thanks guy! and thanks Terry! I think i understand it now, cheers! :)
Hi, I am planning to move into my investment property and turn that into my primary residence (I am currently living with my family).
Hit your current lender up for a lower rate
Most lenders differentiate between owner occ and investment.
With some lenders it’s a straight forward process – with others it can be more difficult.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Hi Terry,
Not correct Benny
A valuation is only needed if an existing main residence becomes income producing.
In this case an investment property is moved into so a valuation can’t be used.
The CGT will be worked out on the portion of the time that the property was a rental.Of course – I had it the wrong way around !! Thanks for the correction Terry – and the example helped greatly too.
Regards,
Benny
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