Hi everyone, I have read through the forums but i am still having trouble understanding how to navigate this issue, I have 2 IP i am looking at selling to fund a new PPOR and seeking some guidance in regards to managing the CGT implications. Purchased property 1 and lived in it as my PPOR 2012 until renting it out on the 30/3/2018. Currently tenanted still. Potential capital gain 150,000 Purchased property 2 and lived in it as my PPOR 30/11/2018 until renting it out on the 30/10/2020. Currently tennented still. Potential capital gain 200,000 Currently renting my PPOR. I intend to sell Property 1 in the near future but wondered if I would still be entitled to the CGT exemption as per the 6 year rule, or this has been voided due to making property 2 my PPOR before renting it also. In which case would it make more sense to sell property 2 first and making property 1 my PPOR again for 12 months? Any help would be greatly appreciated.
You could potentially choose which of the 2 to use the exemption on. It would generally be better to choose the one which will result in the best tax savings.
Thanks Terry, So I can't qualify for the exemption more than once? i thought the exemption was possible to claim for every PPOR. I would prefer to sell property 1 as the market timing is ripe. Property 2 is currently offsetting another negativley geared asset, but if I need to sell property 2 first then property 1 for the exemption I would opt for that. So potential capital gain 150,000 and refiance property 2 to purchase a new PPOR, but I don't want to muddle it up and miss out on the CGT exemption. Thanks again Terry.
Thanks Terry, So I can't qualify for the exemption more than once? i thought the exemption was possible to claim for each PPOR. I would prefer to sell property 1 as the market timing is ripe. Property 2 is currently offsetting another negatively geared asset, but if I need to sell property 2 first then property 1 later to capitalise on the exemption I would opt for that. Scenario 1: Sell property 1, potential capital gain 150,000 and refinance property 2 to purchase a new PPOR. Scenario 2: Sell property 2, potential capital gain 200,000 and refinance property 1 to purchase a new PPOR. Scenario 3 Sell property 1 & 2, potential capital gain 150,000 & 200,000 to purchase PPOR. What's the best way to go about this, I don't want to muddle it up and miss out on the CGT exemption. Thanks again Terry.
I am not able to say what is the 'best'. CGT is just one thing to consider out of many. Even for CGT which way you go will depend on the circumstances and something you should get advice on.
Is this something that should be asked of the accountant who knows the dates and uses of these houses? This seems complicated, and I'd wonder if some accountants really understand the rules? If the poster's accountant isn't really au fait with the rules, who should he go to for advice?
You can qualify more than once, but you can’t overlap. If you claim (example) 2018-2020 exemption for property 1, you can’t claim that same period again for property 2.
dont forget the 6 month overlap rule. it might not be a massive saving but could still have a decent impact on the potential tax savings.
How much of the $150k gain is since 30/3/18? Seek expert advice, but the taxable portion could be much less if this was an eligible main residence exemption to this point. Clue: Search for property first earning income and valuations at that time. See if your position qualifies. Please seek expert advice before deciding your course of action. Good luck
