CGT liability

Discussion in 'Accounting & Tax' started by mkbonline, 10th Aug, 2019.

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  1. mkbonline

    mkbonline Well-Known Member

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    Location:
    Kellyville, NSW
    I purchased 2 bed townhouse as my PPOR in Dec 2010 for $320K in Toongabbie NSW. Lived their till Feb 2015 and then moved to overseas with a new job. I came back to Australia in Nov 2016 and was renting out in a different suburb till Dec 2018. I brought new place and move in Dec 2018. Old PPOR (Toongabbie) is rented out since April 2015 (more than 4 years now).Current estimated market price is $570K.

    I want to sell it and invest money in offset account of new PPOR. .I have consulted few tax agents but getting conflicting advise regarding CGT liability.My question – Will I have CGT Liability if I sell old PPOR?

    Cheers,
    MKB
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Not enough info, but possibly not as you have been absent for less than 6 years.
     
  3. Mike A

    Mike A Well-Known Member

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    at Feb 2015 could elect for the property to continue to be your main residence assuming you moved in as soon as practicable after purchase in Dec 2010.

    Feb 2015 to Dec 2018 covered by main residence absence provisions.

    Dec 2018 have a choice. Continue for Toongabbie to be your main residence until you sell it. In that case would be CGT free.

    OR elect for your new property that you live in since Dec 2018 to be your main residence.

    1. if you sell Toongabbie CGT free by extending the main residence absence provision you will be subject to partial CGT on your new property
    2. if you dont extend the main residence absence provision to Toongabbie it will be subject to partial CGT on sale.

    What is the conflicting advice being provided ?
     
    Paul@PAS likes this.
  4. Yasharora

    Yasharora Member

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  5. mkbonline

    mkbonline Well-Known Member

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    Location:
    Kellyville, NSW
    Thank you for your detailed response @Mike A

    Given - I a plan to spend atleast 10 years in the new property - i expect it to appreciate more than Toongabbie house.

    Now if i sell in Oct 2019 and go with option 2 i.e. I dont extend the main residence absence provision to Toongabbie - will I pay CGT from for price increase since May 2015 (when i move out of the property for overseas) OR will I pay CGT from for price increase from Dec 2018 (when i purchased new PPOR) ?

    Cheers,
    MKB
     
  6. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    are you talking about toongabie?

    You have a choice.
    a) cost base reset at first used to produce income, or
    b) use the 6 year rule