main residence capital gain tax exemption BUT div 43 claimed

Hi guys,

i have a question about tax issue. i lived in a property as main residence for years and i bought a new one and moved in there and rented out the old one for half year before i sold it.

i know that there's 6-year period exemption rule for main residence making rental income. So i don't need to have captal gain tax when it was sold.
BUT my question is that i declared my rental income but at the same time i claimed div 43 in my 2017 financial year tax return.

i know that if you buy investment property and claimed div 43 before it was sold, you have to reduce cost base of the property so you need to pay more CGT. (you saved money before by claiming div 43 so when you sold it, you need to pay back some money)

in my case, i am exempt for CGT for main residence, what to do about the div 43 part that i claimed before? or simply leave it? if so, everyone would have done the same. (for main residence with rental income within 6 years before selling, if you didnt claim div 43, it was your loss)???


Thanks very much!

 

nothing to do if the property is exempt.

 

Worth doing a scenario analysis. I just did one for a client where the four year rule was available for property two and main residence absence provisions on property one. If the client had merely applied the main residence abscence provision the tax difference would have been 200k. A huge difference.

In this case it was worth not applying the main residence absence provisions and applying the four year rule. A small bit of tax was better to pay this financial year than a larger tax liability in 5 years time when they expect to sell the current main residence.

Tax planning was the key