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Converthing PPOR to Investment, Capital Gains

Discussion in 'Accounting & Tax' started by DareDevil, 23rd Aug, 2016.

  1. DareDevil

    DareDevil Active Member

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    Hi All
    I am planning to buy a new PPOR and make the current one an investment, the question is do i need to do a revaluation before making an investment for the capital gains tax reason or is it just 50% of the initial purchase price (purchased 3 years ago so there is a considerable appreciation)
    Also is there anything else i need to do before making this an investment (except like getting a deprecation schedule, etc.)
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Yes the cost base will be the value at the time it becomea an investment.
     
  3. DareDevil

    DareDevil Active Member

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    Thanks for the quick response Terry, One more question, whom should i get the valuation done, does a valuation by bank or RP Data or do i need to a professional valuation done by a property valuer?
     
  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    I t u ink you might be able to use rp data but you would want to maximise your valuation to save tax.
     
  5. DareDevil

    DareDevil Active Member

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    Thanks Terry, it may be a stupid question, but normally what is the best way to get the highest valuation?
     
  6. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    Desktops done through a broker via a bank.
     
  7. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Employ a valuer and tell them what you are using the valuation for.
     
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  8. S0805

    S0805 Well-Known Member

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    How about getting local RE agent and tell them higher valuation required....I seen sometime they give range but prefer they give set amount
     
  9. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Yes this is possible.
     
  10. DareDevil

    DareDevil Active Member

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    Thanks all for the valuable information, I already got a desktop valuation done by few banks, i will ask for a valuation from a RE agent, thanks again for PC community.
     
  11. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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  12. DareDevil

    DareDevil Active Member

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    Hi Terry and other,
    One other questions, when we adjust the cost base to the date of the making it an investment, can we still deduct initial expenses at the time of the purchase like Stampduty, LMI transfer fees etc. when we do sell the property
     
  13. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Yes.
     
  14. S0805

    S0805 Well-Known Member

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    are you suggesting stamp duty, LMI costs paid while purchasing the ppor can be still added back when you sell once it becomes IP. doesn't the date it becomes IP new cost base is assigned and alongside stamp duty and all other costs during ppor purchase is lost....
     
  15. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    The cost base will be reset to the value of the property when it first becomes income producing. So any expenses incurred before then won't be able to be deducted against the capital gain when the property is sold.
     
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  16. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Sorry this is wrong.
     
  17. DareDevil

    DareDevil Active Member

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    Thanks Terry for clarifying.
     
  18. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    I hate to disagree with myself, but I must have read the question wrong!
     
  19. Spraytan

    Spraytan Member

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    Hi all,

    My current PPOR has 2 spare rooms that we are thinking of renting out. We are thinking of renting it out 2 years before the kids take over the room. We are wondering how to work out the CG tax to see whether it is worth the effort? Is CG tax calculated for only the 5 yrs or for the time we live in the PPOR?

    Any advise would be appreciated.
    Thanks