Another CGT Topic

I won't check your figures but the example I used in my thread above should be correct for the circumstances listed.

 

“IF” you ignore the small business usage as you say - (so this is hypothetical) the calcs would be:

Cost base reset to $1,000,000 when first rented out in 2010
You claimed eligible for main residence exemption for 5 years (if this is correct - you can’t have another for this period apart from potential minor overlap)
Rented for 2010 - 2020
Sold for $1,400,000
If $1.4 is correct net sale result, 1.4 - 1.0 = 400k gain.
50% of period you claim is eligible for 6 year absence rule = 200k taxable.
50% discount for >12 months = 100k added as capital gain to your income.

This is just based on the facts you have advised and ignoring the business usage as requested.
Depreciation, 3rd element & other potential adjustments are likely still required.

I would strongly recommend you consult with some of the experts suggested above to ensure all calcs are correct and other factors you may or may not be aware of that impact are considered.

Good luck

 

@craigc unfortunately the first premise is wrong.

He cant use the first used to produce income rule i.e. reset the cost base to market value as he used and claimed a percentage of occupancy expenses.

That rule states that in order to use the rule just prior to the cgt event if you had hypothetically sold the property the entire gain would be exempt.

In this case it wouldnt have been exempt as it would have been subject to a partial gain due to part of the property being used for income producing purposes.

INCOME TAX ASSESSMENT ACT 1997 - SECT 118.192 Special rule for first use to produce income

the important bit

(1) There is a special rule if:

(b) you would have got a full exemption under this Subdivision if the CGT event had happened just before the first time (the income time ) it was used for that purpose during your ownership period.

BUT he wouldn't so 1 (b) Sorry No Prize !!

Refer to WIlly Wonka



Im not as angry as mr wonka but unfortunately he is right for the 2010 time.

He therefore cant use this rule in 2010. Point 2 is actually extremely important. Those who don't absorb tax like a Kleenex Paper Towel wouldn't know it and many tax accountants would also miss it.

 

i think 2009 is the key here.

 

You get an everlasting gobstopper

 

Agreed Mike - that’s why my answer in the first line answered the hypothetical question that was asked “IF” it was not used in 2009 for business.

As it appears it was, my answer does not apply but is a hypothetical as asked on the rest of the calcs.

Cheers