2 adjacent titles, PPOR on one - future investment strategies - CGT implications?

Discussion in 'Investment Strategy' started by Alemilyx, 9th May, 2022.

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  1. Alemilyx

    Alemilyx Active Member

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    We are in a position where we are considering purchasing a property with two titles.

    One title has an existing established house and the second adjacent title is currently just an extension of the yard of the house.

    For now we are planning to enjoy the residence for 5-10 years and enjoy the adjacent title as a garden, however looking forward into the future, how would the following be considered from a capital gains tax perspective.

    (The initial purchase of the property is as a PPOR listed as two separate titles, but being purchased under 1 contract).

    1. We build an additional residence on the second plot (title 2)
    2. We move out of our PPOR (title 1) and sell this title/property.
    3. We immediately move into our newly built residence on (title 2), live in it for 12 months and then sell this property.

    Would both of these properties be free from a capital gains perspective?
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    nope.
     
  3. Alemilyx

    Alemilyx Active Member

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    Thanks Terry.
    So to retain PPOR capital gains exemption, the two titles would have to be sold at same time as a single unit as they are on this occasion. Is that it basically?
    Any directions as to what ruling makes this the case, just so I can better understand.
     
  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    It depends.
    If you lived in both and it was capital account and all other exemption requirements met then yes
     
  5. Alemilyx

    Alemilyx Active Member

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    So if our family unit resided in both of the properties prior to selling for at least 12 months after the second was built and then we sold BOTH of the properties as a single sale, it would be CGT exempt?
     
  6. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    It will depend on the circumstances but it is a possibility. Being on separate titles doesn’t prevent this