Do I have to pay Capital gains Tax? please help

Discussion in 'Accounting & Tax' started by Leo in Sydney, 13th Jul, 2019.

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  1. Leo in Sydney

    Leo in Sydney New Member

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    Hello everyone,
    I a purchased new house in 2006 under the first home owner grant. Lived in there for 6months to satisfy the FHG rules. I struggle with payment so after 6 months I rent it out for 2 years than moved back in, looking to sell this year.
    Can I claim Full capital gains tax exemption or did I move out too early?.
    I tried to find this info on ATO website but no where does it say how long you need to stay at the property before you can rent it out.
    Any help appreciated I'm quiet stress about it.
     
  2. Mike A

    Mike A Well-Known Member

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    Will be subject to capital gains tax. Might be able to use strategies to reduce it.
     
  3. Terry_w

    Terry_w Broker, Lawyer, Tax advisor Business Member

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    main residence exemption could potentially apply to make it exempt.
     
    Perthguy likes this.
  4. Yasharora

    Yasharora Member

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    You can get main residence exemption under the six year rule for the time it was rented out provided you were not treating any other residence as PPOR
     
  5. Terry_w

    Terry_w Broker, Lawyer, Tax advisor Business Member

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    I don't think enough info to come to this conclusion but it might be the case.
     
  6. Leo in Sydney

    Leo in Sydney New Member

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    Thanks all for Ur replies.
     
  7. Mike A

    Mike A Well-Known Member

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    However, if you use any part of your home to produce income before you cease living in it, you cannot continue to treat that part of the dwelling as your main residence after you cease living in it. This means you cannot get the main residence exemption for that part of the dwelling either before or after you cease living in it.

    Example:

    Montgomery Burns purchased a home under a contract that was settled on 1 July 1992 and he and a tenant moved in immediately. he used 75% of the home as his main residence and the remaining 25% was rented out until 30 June 1997.

    On 1 July 1998, he moved out and rented out the home until it was sold under a contract that was settled on 30 June 2004. Montgomery chose to treat the dwelling as his main residence for the six years it was rented out. he made a capital gain of $10,000 when the home was sold.

    As 25% of the home was not used as his main residence during the period before Montgomery ceased living in it, part of the capital gain is taxable, calculated as follows:

    $10,000 x 25% = $2,500.