CGT and PPOR

Discussion in 'Accounting & Tax' started by Shane e w o, 3rd Mar, 2020.

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  1. Shane e w o

    Shane e w o New Member

    Joined:
    3rd Mar, 2020
    Posts:
    2
    Location:
    Illawarra
    Hi
    I'm having a little trouble fully understanding the 6 year rule when it comes to CGT and PPOR.

    Scenario:
    Purchased a unit in May 2009 as my PPOR and lived in it for around 11 months. I moved out as I was struggling to afford to live in it. I moved in with my parents and rented the unit.

    Mid 2012 I purchased a house with my wife and we moved into it. I sold the unit June 2019.

    My Question:
    I understand I don't have to pay CGT on the period I lived in the house. However, the 2 years after that, when I lived with my parents and the unit was still classed as my PPOR until I moved in with my wife in our house. Is this 2 years under the 6 year rule? Or not, as I changed PPOR and rented the unit for longer than 6 years?
    Cheers for the understanding.
     
  2. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    23,504
    Location:
    Sydney
    Yes the 2 years is within the 6 years and is an absence. You could also treat the unit as exempt or partially exempt for some of the time after mid 2012 if you choose. Your election may also impact both yours and your wife's interest in the present home however but it may also be a benefit depending on a range of factors. If you were to maintain the main residence exemption on your unit using the absence rule NO OTHER PROPERTY you or you spouse own for those same days may be exempt. You may have a few different ways to calculate the potential gain.

    This choice is complex and the options likely need correct advice so you make a sound choice.
     
    craigc and Ross Forrester like this.
  3. Shane e w o

    Shane e w o New Member

    Joined:
    3rd Mar, 2020
    Posts:
    2
    Location:
    Illawarra
    Thanks for clearing that up Paul@PFI.
    I thought it may be complicated however, if I can save some money it will be worth it.
    Cheers for the advice.
     
    Ross Forrester likes this.

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