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CGT question: what applies property not used for investment purposes

Discussion in 'Accounting & Tax' started by Pins, 27th Sep, 2015.

  1. Pins

    Pins Well-Known Member

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    Hi all,

    I saw a friend today and her situation is this.

    She had a place in Woolloomooloo that was her PPOR. During the time she owned this, she also owned a piece of land with a shed on it down the south coast.

    She sold the Woolloomoloo property. The South coast place became her PPOR. She then built a house on the land (after it became her PPOR.)

    She sold the house last financial year. It was still her PPOR.

    Is it as simple as calculating CGT during the time it wasn't her PPOR? Are there any relevant costs to take into account even though it wasn't being utilised for investment purposes during this period?
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    A shed usually doesnt quality as a dwelling. But it would depend on the situation.
     
  3. Pins

    Pins Well-Known Member

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    Thanks Terry, it was a shed that was inhabitable. Had kitchen, bathroom etc

    What about costs associated with the appreciation of the land?
     
  4. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Without an occupancy certificate the ATO doesn't accept a PPOR can exist. And OSR consider it as taxable land for land tax too.

    IMO there is a CGT issue and the south coast property will be subject to some CGT. The calculations could become complex and personal advice is a must.
     
    Perthguy likes this.
  5. MikeLivingTheDream

    MikeLivingTheDream BCOM MCOM MTAX CPA CTA Registered Tax Agent

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    agreed paul. potentially lots of third element costs that may need to be considered to reduce the capital gain.
     
  6. Pins

    Pins Well-Known Member

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    Thanks @Paul@PFI
    Unfortunately she doesn't have all the receipts from the period prior to building the house.
     
  7. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Often overlooked,. Thinking the home is tax free and then things change.....
     
  8. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Except if s118.192 intervenes...I find that some taxpayers expect those costs to count but if 118.192 occurs first they dont.