CGT Question

Discussion in 'Accounting & Tax' started by lostincable, 7th Mar, 2020.

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  1. lostincable

    lostincable Member

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    Hi everyone,

    I searched a variety of threads but couldn't quite work out this one.

    I had a PPOR for 10 years, in 2019 I moved out and converted it to an investment property and have had a tenant in there for about a year.

    At the same time I moved into a new PPOR that was purchased.

    If I sell now is CGT calculated from the purchase price in 2003 or at the point the tenant moved in and a new PPOR was nominated?

    I understand I will get a 50% discount overall but really want to know if CGT is payable at the point it become and investment property and I nominated a new PPOR or the initial sale price?
     
    Last edited: 7th Mar, 2020
  2. Mike A

    Mike A Accountant

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    Could be calculated a few ways

    1. Will you use the main residence absence provisions to the first property when you moved out ?

    2. If you dont use the absence provisions cost base will be market value when it was first rented

    3. Dont forget about the six month overlap rule
     
  3. Terry_w

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

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    Yes it could be totally exempt, it could be cost case reset to the value at the date you moved out, or it could be something other.
     
  4. craigc

    craigc Well-Known Member

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    Also could be if less than 12 months since moved out in 2019 & the cost base reset, 100% of any net gain since then.
    Has the property price boomed since you moved out?
     
  5. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    In cases like this the valuation at the date income was first produced which resets the costbase, the 6month overlap and the selling costs may both generally leave little if any CGT gain and mean the new home maintains full exemption without needing to also use the absence rule which can impact the new home into the future. But the calcs must still be done and any exemption claimed in the return.