Confused about CGT and 6 year rule - Please Help.

Discussion in 'Accounting & Tax' started by Fasteddie888, 10th Nov, 2020.

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  1. Fasteddie888

    Fasteddie888 New Member

    Joined:
    10th Nov, 2020
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    Sydney
    Hi guys I'm a newbie that just wants to be pointed at the right direction as my tax accountant and a friend of mine who's also a tax accountant is telling me different things. . I hope the gurus and masters can help me out please.

    I bought a unit in for 468k Sydney Feb 2014 and was rented out right away as there was tenants already inside. It was rented out until Feb 2015 in which I moved inside with my wife until Oct 2015 we decide moved out as we were expecting a newborn and needed help with my parents so I moved in with them. we sold the unit Oct 2017 631k.

    I did my tax with my currently account in which I paid about 32k CGT.

    My friend told me today that I should have been exempt from the time I moved back in until the property was sold. and he's very sure that's the case and is asking for me to review the case.

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    2nd questions, I have no PPOR under my name and I have recently bought a house in Sydney, now what is the least amount time I need to live there to be eligible for the property to be my PPOR before I can rent it out, also I understand I need to update banks, RTA, insurance etc etc to the new address. but there is mix response if it's 3 months or 6 months. AFTER I'm eligible I will move into a granny flat to look after my elderly parents who's ill but my currently account said as the property I just bought and where my parents live is only 1 suburb away I won't be able to eligible for the 6 year rule so it's best to rent out the property from the start.

    Thanks in advance for reading

    Cheers
     
  2. Terry_w

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

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    Not enough info, but your friend is probably correct. It might be possible to use the 6 year rule after you move out.

    There is no minimum period. The law says the 6 year rule can apply if you are absent from your main residence. so you must establish it as the main residence. It can certainly be as little as 3 months because that is the minimum when constructing a main residence under s118-150.
     
  3. Paul@PAS

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

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    It would be worth review of the amount of CGT. he easiest way is to ask your accountant for the calculation they used. Second opinions are faster and easier that way.

    If it was sold in 2018 (tax year) there is a time limit to amend. Hurry.

    I would always suggest tax advice to be sure of all matters