CGT Again

Have a couple of queries -

Does CGT apply when selling a second primary residence in personal name. Never been rented out.

MTR

 

MTR, you need to explain what you mean by a "second primary residence". Was it #2 in a line of PPORs that you sold in sequence, moving out of one, selling and then moving to the next etc. Or are you trying to claim a CGT exemption on 2 x PPOR's that you held concurrently?

 

Apologies for the confusion.

My daughter just moved to Melb, we will be going over frequently, thought we would buy a townhouse over the next 12 months? She would be living in the townhouse.

We don't want to pay CGT if we end up selling it??

We may have to purchase it in her name to avoid CGT, or perhaps in 2 daughters name, making it fair.
Whatever works to avoid CGT main consideration


MTR

 

CGT applies for all property sold - unless an exemption.
You can only claim one main residence at any one point of time, except for a 6 month overlap on buying and selling.

 

If it is in your name and you have another main residence then it will be up for CGT

 

I didn't realise you can have a 6 month overlap. We're putting our ppor on the market next month after the reno is completed and might move into to a property I'm currently trying to buy as an IP to reno it before renting it out. It's also in Melbourne but I don't think it'll be anywhere near Marisa's.

 

damn, that is what I thought.
The simple way around this is buy in my daughters name, her first primary residence, there is also the FHB grant as well I guess?

 

Perhaps. Just remember she could marry or live with an arse and they could have a crack at it.

 

It's a good one to know: due to problems selling, I went all the way - to the day - on the 6-month mark last PPOR. phew!

 

yes, good point
I think I will buy in Trust, just scared the beeeejesus out of me

 

Ask a solicitor to explain apparent purchaser protection and if it operates in your state

 

thanks

 

There are two catches to the six month overlap rule.
PPOR is occupied since day one. Move out. You do NOT rent it.
Move into PPOR 2
PPOR1 is sold within six months..

If you rent the former residence the pro-rata rule and s118-19 would operate.

Also note that you must have resided in PPOR1 for three months
s118-140 : INCOME TAX ASSESSMENT ACT 1997 - SECT 118.140 Changing main residences

Actually three catches....If you exceed "six months" by one day all bets are off.

 

What is the minimum timeframe that a property can be classed as a PPOR?

 

no minimum.

 

6 months to the day , no rental

 

Cheers @Terry_w . So if one can prove that they lived in the property for two to three months and they have no other PPOR's (or if they do, the other PPOR's are rented out), then this property becomes the PPOR for taxation purposes.

 

Unless you can use one of your melbourne stock it may be quite expensive to buy in the locations you want. It might be one of those times that renting is the better choice. Renting is CGT free

 

Its a question of fact - a property is your main residence if you are living in it and not any another residence.

 

Paul,

extending your example to confirm below scenarios....

There are two catches to the six month overlap rule. P
POR1 is occupied since day one. Move out. Lets say PPOR1 is rented out...
Move into PPOR 2

-PPOR1 is sold within six months & and PPOR2 is also sold later down the track.
So in this case PPOR1 CGT will be apportioned? OR Would it be CGT free?
& PPOR2 will be CGT free as long as it was never rented and been main residence?

-PPOR1 is sold in 10 months & PPOR 2 is also sold later down the track.
So in this case PPOR1 can not be CGT free cause it was held for more than 6 months overlap rule? However the day it become IP will be cost the base for CGT calculation correct?
& PPOR2 will be CGT free as long as it was never rented and been main residence?


cheers