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6 year CGT rule and the granny flat

Discussion in 'Accounting & Tax' started by HappyCamper, 30th May, 2016.

  1. HappyCamper

    HappyCamper Active Member

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    If I were to build a granny flat at my PPOR with a view to live in the granny flat, could I still claim the 6 year CGT exemption if I was not claiming any other property as my PPOR for that period?
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    possibly if you moved out. But not if you are living there as you are not absent.
     
  3. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    And paying yourself rent ??

    You would the retain land tax exemption.
     
  4. HappyCamper

    HappyCamper Active Member

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    Not paying myself rent. But the tenant in the main house would be.
     
  5. menty

    menty Well-Known Member

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    I believe you can if you live in both the granny flat and main house when you move back in
     
  6. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Yes this may be the case.
     
  7. Rob G

    Rob G Well-Known Member

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    There is a complicated and uncertain interaction between s.118-120 (adjacent land & structures) and s.118-145 (absences).

    s.118-20 treats a CGT event in relation to adjacent land and structures to be part of a CGT event in relation to the dwelling.

    s.118-20(5): The land/structure must have been used primarily for private or domestic purposes in association with the dwelling.

    Problem: One view is:

    The GF is being used as a dwelling in its own right during the absence and so you must choose either the main house (with its rented adjacent land) or the GF (with its own adjacent land) as the exempt main residence under s.118-145.

    You have 2 dwellings during the absence.

    Better get some advice whether a pbr is a good approach.
     
    Terry_w likes this.