Forced to keep tenants for the 2 first months before settling in... Is CGT applicable?

Hi,

I bought my home in Melbourne in 2012 but the house was tenanted. I had to wait for 2 months (end of lease) before I could move in.

- So the house was rented for the 2 first months after settlement data. I declared rents and bank interest to the ATO for these 2 months.
- Then I lived in the house for 5 years.

I am now selling my home. Is CGT applicable?

Thanks and regards,

Fred

 

Yes on 2/62 months (or the ownership period).

 

Yes CGT will apply. Waiting for occupancy to end when you bought a home with the tenant in place will not allow you to claim the main residence exemption for that period.

The explanatory memoaranda goes through this situation and you have part of the property as a taxable capital gain. Make sure you work through the numbers as it might not be as bad as you think.

ATO ID 2001/744

 

Yes subject to cgt but it will probably be nil or very Low

 

third element costs will be added to the cost base. interest, council rates, insurance, repairs, etc all done during the period it was your ppor will increase the cost base and reduce your proportionate capital gain.

could look at making a deductible super contribution to potentially reduce the tax payable to nil.

 

Thanks for your answers.

I would have thought that "the taxpayer did not move into the dwelling when it was first practicable to do so" was not applicable to me as I could not legally break the lease.

But if that is the rule, I will comply. CGT should not be too painfull in my case as it will be calculated on 2/62 of 50% of Capital Gain.

 

Or less!