Another CGT Topic

Could you please help me confirm if I'm understanding this properly.

Purchase price in 2000 $500k
Valuation when became IP $1,000,000 in 2010
Claimed another 5 years of PPOR, valuation $1,200,000 in 2015
Sold $1,400 in 2020

1a
10+5 years PPOR
5 years rented
Profit $1,400,000-$1,200,000 = $200,000
200,000 * 50% = 100,000 Tax payable on $100k

1b
10+5 years PPOR
5 years rented
Profit $1,400,000-$500,000 = $900,000
900,000 * 50% = 450,000*25% Tax payable on $112.5k

2.
Run Sole Trader business from home and claimed 20% of holding costs in 2009 only for 12 months

How would I calculate CGT payable on that 20%?
If I go with 1a, =100*20% divided with 1/20?

Thank you!

 

This might help
Tax Tip 109: CGT and Being absent from the main residence for more than 6 years Tax Tip 109: CGT and Being absent from the main residence for more than 6 years

But if it was used to produce income in 2009 the base base might be reset to market value at this point.

 

Thanks Terry, yes I actually followed your notes Just unsure how would I add sole trader part to that calculations? Can there be two calculations?

 

Sole trader working from home might change nothing if small business cgt concessions are applied.

All the calcs are wrong.

Why are you getting a valuation done in 2015 when you moved back in. First used to produce income rule doesnt work that way.

Are you applying the main residence absence provisions ?

 

Didn't move in, done valuation as thats when PPOR became IP
Why is all wrong??

It was used for business only 1 year and 5 years for rental

 

What happened between 2000 and the date it became an IP in 2010 ? Im assuming you lived in it.

And then 5 years later after being an ip you move back in

 

yes so 15 years PPOR

 

Yes the calcs are wrong.

assuming small business concessions don\'t apply:
You bought for $500k in 2000, and moved it
in 2009 cost base was reset to market value $XX
2010 you move out and use the 6 year rule
2015 move back in - is it being used to produce income now?

 

Moved out 2010 and used 6 year rule until 2015
Tenanted 2010-2020

Sole trader in 2009

 

the facts are getting confusing now. above you said you move back in in 2015. so once you move out you never move back in again?

 

sorry for confusion

Thats correct, once moved out never moved in back

 

then there would be 2 calculations you need to do, as outlined in my post linked above, plus factor in the business use.

 

So to summarise:
Purchase price in 2000 $500k
Valuation when became IP $1,000,000 in 2010 (claimed 5 year PPOR until 2015)
Sold $1,400 in 2020
Hold 20 years, lived in there 10 years, 10 years rented but claimed 5 years as PPOR)

Capital Gain $1,400,000 - $1,000,000 = $400,000

Then the 50% CGT discount $400,000 x 50% = $200,000

Only 5/20 of this would be taxable = $50,000

PLUS "plus factor in the business use"

Is that correct?

Thanks

 

And third element costs may play a significant part in reducing the profit pre-apportionment. Its an area where tax advice is clever and in most cases I see we can idntify benefits the taxpayer cant see,

The above calc is quite incorrect. s118-192 market value is NOT to be used in your example for starters. In the period 2009-2010 the property had been a place of business o s118-192 is not eligible

 

no

 

Because of running a business for a short period of time there or something else please?

 

wrong for a number of reasons

 

Could you please help me understand why?

What part am I misunderstanding??

 

call @Paul@PFI your best bet

 

@Terry_w I followed your example from the link you've supplied
Lets ignore business usage for now.
CGT calculation with no business usage still wrong?? What part please