Hi I moved out of my principle home in NSW and rented it out for about 1 year and now I’m selling It. I lived in it for about 10 years prior to this. Six months ago I purchased a place as an investment in VIC and moved into it. I am treating this as an investment even though I’m living it it. I borrowed 100% As PO loan and plan to rent out after I sell the NSW. My question is. Will I have to pay CGT on the NSW property?
How can you treat a home you are living in as an investment. The NSW home could possibly be CGT free. But you need specific tax advice. It might be better if it wasn't tax free
The Vic property is your main residence. It cant be an "investment" as Terry said. Makes no sense. The former main residence (NSW) will assume a costbase of its market value on the date it was first rented and the prior period is treated as exempt (s118.192 ITAA97) Yes the NSW property will be subject to calculation of a capital gain. What that amount could be needs to be determined. Then it may be a option to chosoe to treat it as an absence for the year. BUT this will put a CGT issue on Vic. The question is - which is the riht choice. The NSW gain may be as simple as that market value plus selling costs compared to the sale price. Then consider actual dates so whether its 364 days or 367+ determines if that profit is subject to a 50% reduction. Then taxed at marginal rate of owner/s. Compare this to the potential CGT issues with VIc if the absence rule is used as it then means pro-rata CGT will always apply to Vic. Ieg The first year is taxble. Over 10 years that will dilute so in 10 years 1/10th of any gain may be taxed. Personal tax advice may assist to make the choice.
Paul Yes I want to pay CGT on the Vic property and not the NSW one. Can I do that? What I want to know is does the 6 yr rule only apply to the NSW property if I move back into it or can I sell it tenanted during the 6 yr absence?
