CGT on Perth IP

I have owned an IP in Perth under my own name for several years which I'd now like to sell (Never lived in it, rented out from the start). It's gone up in value by about 300K and if I sold, I would obviously need to pay CGT on this gain. In order to reduce the CGT payable, would the following make sense?

1) Our family moves into the IP and make it our PPOR.
2) Make use of the WA spousal transfer provision so that we end up being 50/50 joint owners without paying stamp duty.
3) Sell the property 12 months after the ownership change.

The 300K CG would then be split 150K for each of us. Minus the 50% CGT deduction for assets held for over a year, that would mean each of us paying CGT on only 75K of capital gains.

On paper, it sounds like a workable solution. My only question is, since I would have owned my half of the property for much longer than my wife at the time of sale, will she actually be allowed to claim a full 50% of the capital gains as her own? Or would it need to be pro-rated in some way (taking into account her much shorter length of ownership)?

Thanks for any input.

 

Short answer is no. Transfer to a spouse will trigger cgt

 

The wa stamp duty exemption does not cover federal taxes.

 

Thanks Terry, that's a great point and something I didn't even think about.

 

Just a follow up question: Let's say I just keep the property in my own name and then have my wife and kids (but not me) move into it as their main residence. Would that time count as being owner occupied when the time comes to sell and calculate the proportionate CGT?

 

You are the taxpayer so you would need to establish it as your main residence

 

I have a tax tip on this one too

 

The worst case scenario for CGT in such cases is 50% x the taxpayers marginal tax rate. Assuming the highest rate then the effective tax rate is no worse than 24.5% of the profit. The profit needs to be reliably estimated and will be affected by selling costs and purchase acqusition costs as well as past depreciation and capital allowances claimed.

I usually suggest the taxpayer also calculate the equity it will relesae. Consider the selling price and deduct the tax Then deduct the loan that needs to be paid out and any selling costs. Then consider what you may do with the equity. Compare that the the scenario of not selling.

To change the tax outcomes the only thing you can do is make the property a main residence. Then in the future pro-rata apportionment occurs. If you (the family) live there one week it may make no difference eg one week exempt v say 150 weeks taxable = 0.6% exempt (May save you $240 at best). But live there 20 years and it may dilute the taxable period.