If you move out of your PPOR and turn it into a rental, and the propertys valuation was say $300K. Say you sell it 10 years later at $600K, will capital tax be payable at $300K or $600K?
Sorry I should add that the purchase price was say $250K. So would CGT be paid at the purchase price, or when I got the valuation and decided to turn it into a rental?
I would think it would be from the value on the date you nominate your next PPOR and use the 6 year rule on the new one. Otherwise if you move out and rent you have 6 years of growth up your sleeve CGT free.
You would have to work out the cost base. If you are moving out of the main residence this would be the value at the time it started producing income. But there may be other factors to consider.
just purely based on these numbers. I would say the income producing years would be from 300k now to 600k in 10 years time. and CGT applies to the 300k gain when you sell. the 250k purchase price to 300k capital gains would be exempted due to it being your PPOR. but again, its not that simple in actual calculation. and as Terry mentioned, a lot of factors to consider.
If moving into another PPOR then yes its your Sale price in 10 years from now $600k less than value today $300k x 0.5 = 150k gains BUT you need an official valuation of todays value. If you DONT move into another PPOR eg you go and rent somewhere OR you move overseas etc then you get an additional 6 years as you don't have another PPOR eg so you would pay capital gains tax on 4/10X300k = 120k x 0.5 = 60k gains (but make sure you move back to Australia before you sell otherwise you lose the 0.5% discount).
Some inaccuracies there Dean. CGT is not calculated on moving, but on the sale of a property. An official valuation isn't needed. Market value can be estimated by other methods such as a real estate agent. The discount is not 0.5% but 50% and even if you move back to Australia at the time of sale the 50% discount won't apply for the period while you were overseas as a non resident.
lol yep sorry of course meant 50%......had 0.5 in the calculation then went back and added % without changing the value. ooops. Interesting about "real estate agent" offering valuations. I was told by "tax professionals" had to be written valuation by professional valuer.....eg couldn't just be an agent writing that based on XYZ sale we feel the value is XYZ etc. BTW Eng not going to add any further info but article here - Hidden capital gains tax traps you may not know about
Also @eng here is an article with the exact calculations you need - Beware the Pitfalls of the Principle Place of Residence Exemption and the 6-Year Absence Rule
