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Capital gains tax question please.

Discussion in 'Accounting & Tax' started by justine77, 26th Sep, 2015.

  1. justine77

    justine77 Well-Known Member

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    I was told that there are things we can do NOW to avoid paying capital gains tax on a house

    From another thread it seems that avoiding paying capital gains tax relies on if a house was lived in even briefly by the owners before renting it out. Is this correct?

    Does it matter if it was lived in by the owner themself or can it also be lived in by the owners adult child or grandchild, for free and then will this exempt it from paying cgt if it is sold?


    if the homeowner's adult child or grandchild lived in i the house rent free in the beginning of owning the house, and then rent was charged but to the same family member, a child or grandchild, would it still be exempt from cgt because the beginning was lived in by family without rent charged.


    Does calculating cgt start again every time the house is sold or inherited and now owned by a new person.

    So if it was again passed down a generation in inheritance, and again the new people allowed a family member a child or grandchild to stay in it rent free and then later they charged rent, or then sold the property, would it be exempt from cgt?


    what is everything we can do now so when it is passed to the next generation it will avoid cgt?

    thank you.






    i
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    The CGT exemption is for a person's main residence. It needs to be your main residence to be exempt.

    Only one house at one time can be your main residence.

    Live in every house you can when you buy it. Die in a rental property and keep all receipts forever.
     
    MikeLivingTheDream likes this.
  3. MikeLivingTheDream

    MikeLivingTheDream BCOM MCOM MTAX CPA CTA Registered Tax Agent

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    Not owing any property means you will avoid CGT :p
     
  4. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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    Never sell. No CGT to pay.
     
  5. datto

    datto Well-Known Member

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    Whao, too complicated for me.

    Ring the ATO and try to keep a straight face lol.
     
  6. Julia

    Julia New Member

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    Only if the child is under 18 can they cover the house with your main residence exemption. Providing an heir is not a non resident of Australia for tax purposes when you die then there is no CGT on death it just rolls over to the heir, so yes just passing the house down from one generation to the next makes sure no CGT is paid.
     
    Last edited: 27th Sep, 2015
  7. justine77

    justine77 Well-Known Member

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    so if a new generation inherits a house and lives in it

    and then sells it t

    hen no cgt is paid even though the last generation might have only rented it out?

    it goes by what the new owner does not by what the old owner did?
     
  8. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Nope. Cgt would apply when the children sell but not on transfer of title at death or original owner.
     
  9. melbournian

    melbournian Well-Known Member

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    Just stay in the beginning of each property prior to commencement of renting it out you so u can claim the ppor exemption. Only way to avoid paying cgt
     
  10. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    This won't help you avoid CGT across more than 1 property though. Mike's solution is the easiest.