Just checking that I’ve understood things correctly and that PPOR1 can be treated as our main residence, while paying no CGT and claiming a capital loss for PPOR2.
- PPOR1 bought June 2011 for $370k. Lived in it until Sept 2018 when it was rented out. Sold in May 2023 for $450k.
- PPOR2 bought Sept 2017 for $575k. Rented out for one year until Sept 2018 when I moved into it. Sold in August 2022 for $535k.
Can I elect to treat PPOR1 as my PPOR for the entire period of Sept 2018 to May 2023, and pay no CGT (and claim a capital loss for PPOR2)?
Hi Ceegee,
I believe you have it right, but that is simply an opinion I have, based on reading articles from others who KNOW. Hopefully someone with the proper credentials will come by to provide a proper response. That is not me – sorry,
Benny
Always advisable to get advice in this sort of situation before taking action….. not sure 6 year rule applies if you buy another PPR. If you rent out your PPR and go overseas then you have a 6 year window before you have to pay CGT, but if you buy another PPR you may lose the 6 year benefit. If this were not the case everyone would be doing it!!!!! This is general info only and as I say best to get advice from an accountant who understands real estate before taking action in future….
ochorios1352 | PWC Realty
http://pwcrealty.com.au
Email Me | Phone MePositive Wealth Creation
Can I elect to treat PPOR1 as my PPOR for the entire period of Sept 2018 to May 2023, and pay no CGT (and claim a capital loss for PPOR2)?
Not enough info to know for sure, but it could potentially be the case that PPOR 1 could be claimed as the main residence for the whole period because of s118-145 ITAA97
6 year rule can apply even if you do buy another main residence- but you can’t claim the exemption on both for the overlapping period
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
CeeGee, I suggest you request a private binding ruling with the ATO (or get your tax-agent to do it). Sample application forms are on their website. The ruling is binding on the ATO so you know when you lodge your appropriate tax return (eg if you need to offset any capital loss against any future capital gain), you have that private binding ruling as your back up. Use plain English and provide full details.
Just remember to keep the ruling until you need it. The ruling is personal and applies only to you.
It is the safest way to go and gives you certainty.
Peter
There should be no need for a private ruling for a question like this. basic tax advice should be enough.
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
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