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CGT with long term PPOR turned rental

Discussion in 'Accounting & Tax' started by Adam_W, 1st Oct, 2016.

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  1. Adam_W

    Adam_W Member

    Joined:
    3rd Jul, 2015
    Posts:
    6
    Location:
    Melbourne VIC
    Bought a PPOR in Sydney in 2009 and lived in it for 15 years
    I moved to Melbourne and rented the Sydney house from June 2014 to June 2015
    While initially in Melbourne I lived with a friend from June 2014 until I bought a Melbourne PPOR in February 2015
    Sold the Sydney PPOR in October 2015

    My understanding is that CGT is now payable, worked out as follows. Is this correct?

    The cost base on the Sydney house is the market value of the property in June 2014 when I first started renting it out. (How do I appropriately determine its value at that time?)

    Gross capital gain is the difference between sale price (less costs) less the above market value.

    I claim the main residence exemption until Feb 2015 when I bought the new PPOR in Melbourne.

    I need to calculate the number of days from date first rented until October 2015 when the Sydney house was sold. This becomes the “ownership” period.

    The non-main residence days are then calculated as number of days from Feb to Oct.

    I then work out what amount of capital gain made by:

    gross capital gain (calculated above) x non-main residence days / ownership period days

    this amount is the assessable capital gain. I then reduce this amount by any carry forward losses.

    once I have this total, as I held the asset for more than 12 months, I take a further 50% discount and now this is the assessable amount.

    Thanks in advance for comments/guidance.
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
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    Location:
    Sydney
    Sydney could be exempt.
     
  3. Mumbai

    Mumbai Well-Known Member

    Joined:
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    Location:
    Sydney
    How was the property market in 2024? Any tips? Did it crash? Was trump elected or Hillary?
     
    Stoffo, mikey7 and Terry_w like this.
  4. Adam_W

    Adam_W Member

    Joined:
    3rd Jul, 2015
    Posts:
    6
    Location:
    Melbourne VIC
    Thanks Terry. How do I confirm if it would be exempt?
     
  5. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
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    Location:
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    Check out s 118-145 itaa97
     
  6. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,358
    Location:
    Sydney
    I agree. It may still be subject to land tax however. But....

    1. Taxpayer choice of which property to apply a CGT exemption to.
    2. Third element cost base expenses