CGT or CGT exempt

Discussion in 'Accounting & Tax' started by money, 1st Mar, 2021.

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  1. money

    money Well-Known Member

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    3 examples below. Would each example be CGT exempt?

    1. Jack & Jill own a pre-CGT (1985) investment property that they rent out. Property is then sold or one of them passes away. Five years later the other one passes away.

    2. Mr & Mrs Smith lives in a PPOR. They move out and rent it out for 6 years. They sell it. (Does the signed contract of sale need to be dated before the 6 years is up?)

    3. Harry & Sally bought a rental property which they have rented out for 10 years. Harry feels he's about to pass away so they both move into the rental property. Harry dies one day later. Then Sally sells the property one day after his death. (Is there a set amount of months they need to move into the property before Harry dies?)
     
  2. Scott No Mates

    Scott No Mates Well-Known Member

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    Too little information to go on but the answers do change depending upon the circumstances (don't rely on this info). @Terry_w has written specifically on this topic - look it up - there are answers to all of them.

    It is exempt

    What happens in the meantime? If the surviving owner (or other party) inherits the share of property, that portion will become an asset for CGT purposes from death (unless disposed of within a set timeframe).

    Are they nominating any other property as their principle residence at the same time?

    see the @Terry_w topic
     
  3. Terry_w

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

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    1. not enough info. Might be CGT exempt if sold before the death, not after.
    2. not enough info, might be exempt
    3. how could the non-owner wife sell the property 1 day after death? A contract subject to probate perhaps? If she was the executor and sells it then it could be exempt if it was his main residence at death. The question here would be was it his main residence?
     
  4. Paul@PAS

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

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    Personal tax advice is needed as each question lacks full information.
     
  5. money

    money Well-Known Member

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    Is there a set amount of time (days/weeks/months) needed to turn an investment property into a main residence prior to death (by moving into it and living in it)?
     
  6. Paul@PAS

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

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    No. It must merely be the main residence of the deceased at the time of death. I suppose they could drop dead carrying boxes of their worldly possessions in and its met. Signs of a main residence should include services connected etc. Presence of possessions etc. If Fred was moving in and was at his old unit waiting for the truck to arrive to take all his possessions to the dwelling I dont think the main residence test is met. You cant "intend" to move in. And if its leased it cant also be the main residence of the owner. Its a matter of fact.

    May also be affected by spouse and other issues. eg Is title as joint tenants ? In which case title reverts to the other owner and doesnt pass to or through the estate.
     
  7. Terry_w

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

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    no
     
  8. Trainee

    Trainee Well-Known Member

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    Those scenarios in terry’s tips are worded very deliberately. Most people might think he’s watching tv reruns while doing it.

    Non experts should just use real scenarios, or ask a question.
     
  9. Paul@PAS

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

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    I have long suspected he is watching The Simpsons on a loop
     
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  10. Paul@PAS

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

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    I suppose there is one avoidance strategy. Its a bit "weekend at Bernie's" and involves not calling the ambulance. Evict the tenants and move him in then call and report pop's death. Its a deceit too since he was dead before moving in.