CGT on rental turned PPOR then rental again!

Discussion in 'Accounting & Tax' started by Directproperty, 22nd Apr, 2019.

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  1. Directproperty

    Directproperty Active Member

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    Can I claim the 6 year PPOR rule when a house I bought in 2008 was rented for 4 years then I moved in for 2 years and then rented it until I sold it in 2018? I’m fairly sure from my past research that you can only claim the 6 year PPOR rule when the house is your PPOR first and is then rented. I have used this rule for 2 properties but I moved straight into them before renting them out. Or is the CG calculated on the days rented versus the days it was PPOR? Thanks!
     
    Directproperty, 22nd Apr, 2019
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  2. Terry_w

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

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    Can't claim the absence rule until you are absent after it was your main residence
     
    Terry_w, 22nd Apr, 2019
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  3. wylie

    wylie Moderator Staff Member

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    @Terry_w the poster did live in it as main residence for two years, and then was absent for (under?) six years before selling.

    Does it matter that he rented it out for four years before making it his main residence?
     
    wylie, 22nd Apr, 2019
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  4. Archaon

    Archaon Well-Known Member

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    "Moved back in" does not necessarily mean "Main residence"

    Did you claim any other property as your "Main Residence" during the years 2012 to present?

    Your cost base would've been updated from when you starting renting out again in 2014, has the price increased significantly from then to now?
     
    Archaon, 22nd Apr, 2019
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  5. Mike A

    Mike A Well-Known Member

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    No it wouldnt
     
    Mike A, 22nd Apr, 2019
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  6. Archaon

    Archaon Well-Known Member

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    Maybe I worded it incorrectly, but if you move back into a property as your main residence and then rent it out again, your CGT is calculated on the value at which it became a rental, happy to be proved wrong but this was my understanding.
     
    Archaon, 22nd Apr, 2019
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  7. Mike A

    Mike A Well-Known Member

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    Not correct. One of the requirements of the first used to produce income rule is that you would have been entitled to a full exemption if the CGT event happened to the dwelling immediately before you first used it to produce income.

    As the OP rented the property first they wouldnt have been entitled to a full exemption if it was sold prior to first producing income.

    Therefore the cost base is not reset to market value at that time.
     
    Mike A, 22nd Apr, 2019
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  8. wylie

    wylie Moderator Staff Member

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    Does anyone know the answer to this?

    Can the six year absent rule only apply if the property started out as your main residence?
     
    wylie, 22nd Apr, 2019
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  9. Mike A

    Mike A Well-Known Member

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    No
     
    Mike A, 22nd Apr, 2019
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  10. Terry_w

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

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    Yes it matters.
    6 year rule could be used after moving out.
     
    Terry_w, 22nd Apr, 2019
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  11. Directproperty

    Directproperty Active Member

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    I didn’t have any other main residence at the time of living there. Unfortunately I didn’t get a valuation when I moved in and out of the property but the most CG seems to have occurred since 2014 when I rented it out again. I understand I need to pay CGT on growth when it was originally tenanted. I was just hoping the 6 year PPOR rule could also be used when a property is first rented then becomes main residence and could commence the 6 year rule from when it’s rented again. Thanks!
     
    Directproperty, 22nd Apr, 2019
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  12. Mike A

    Mike A Well-Known Member

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    You dont seem to have listened to a single word. You wont pay cgt on the value of the property since it was tenanted.

    You will pay partial cgt from the capital gain from the day you purchased it.

    Get some tax advice.
     
    Mike A, 22nd Apr, 2019
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  13. Terry_w

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

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    No valuation is needed. In fact one could not be used.

    6 year rule can be used.
     
    Terry_w, 22nd Apr, 2019
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    Mike A likes this.