CGT, PPOR-IP-PPOR, residency, tax question

Discussion in 'Accounting & Tax' started by luce.rocks, 1st Feb, 2022.

Join Australia's most dynamic and respected property investment community
  1. luce.rocks

    luce.rocks Well-Known Member

    Joined:
    29th Jun, 2015
    Posts:
    56
    Location:
    Spain
    Hi folks! Long time :)

    I have a house in NSW that I bought in 2004. It was my PPOR for a few years, but has been rented since 2007.

    I haven't owned any other property since then.

    I've been living overseas on and off since 2008, but only the last 2 years have I been non-resident for tax purposes.

    I want to sell my house to pay out my mum's mortgage.

    Obviously I want to pay as little tax as possible.

    Is there any benefit in moving home to Oz for a year, moving back into the house, making it my PPOR again, before selling? Or does it not work that way?

    Is there anything else I can do to reduce my tax bill?

    Thanks for lending me your wisdom! :)
     
    Sonick likes this.
  2. Terry_w

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

    Joined:
    18th Jun, 2015
    Posts:
    41,672
    Location:
    Australia wide
    There could be a large benefit in doing that. non residents can't use the 6 year rule, and are taxed at a higher rate
     
    craigc and Sonick like this.
  3. luce.rocks

    luce.rocks Well-Known Member

    Joined:
    29th Jun, 2015
    Posts:
    56
    Location:
    Spain
    Thanks Terry. Guessed as much. Not ready to move for a few years yet, so I guess Mum will have to wait :)
     
  4. Paul@PAS

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

    Joined:
    18th Jun, 2015
    Posts:
    23,319
    Location:
    Sydney

    Sorry to be the bearer of bad news but all former main residence exemptiosn are LOST if you sell a former home while non-resident for tax purposes. If you can defer the sale until at least 6 months after return and restablishing tax residency all that is forgiven and ignored. Note too there is no CGT discount for the taxable period while non-resident so dates will play a part. As will the value of the property back in 2007 when it was first rented (usually).

    I would suggest personal tax advice which will include specific details and knowledge and a estimate of the tax amounts involved using some basic assumptions. Good you asked first !!
     
    luce.rocks and Sonick like this.

Buy Property Interstate WITHOUT Dropping $15k On Buyers Agents Each Time! Helping People Achieve PASSIVE INCOME Using Our Unique Data-Driven System, So You Can Confidently Buy Top 5% Growth & Cashflow Property, Anywhere In Australia