PPOR > IP > Selling > how to calculate market value

I converted my PPOR to an IP and am now thinking of selling the IP - but before I make a final decision I wanted to confirm something about determining the market value when the property became an IP.

Originally bought property in 2001 for $220,000
Lived in as my PPOR until 2013 when it became an IP (at the time it was valued at $400,000)
If I do sell this year, I will roughly expect a sale price of $570,000

I could obviously use the $400,000 as the market value and therefore a growth of $170,000 over 4 years. CGT $170,000 * 50% = $85,000.

But I also thought I had read 'somewhere' - that another option is to take the increase across the whole period of ownership - $350,000 - and then calculate the CGT amount based on the fraction of time it was an IP - total ownership was 17 years - $350,000 / 17 = $20,588 per year * 4 years as an IP = $82,352 * 50% = $41,176

So I would rather pay CGT of $41,176 than $85,000 - but am I talking nonsense.

 

must used market value when first used to produce income. in your case $400,000

you could also consider whether it is worth applying the 6 year main residence absence provisions but note any other property will then be subject to CGT. worth doing the sums.

 

Thanks Mike for the response. I have read and thought about the 6 year main residence absence provisions but was thinking I might just be kicking the can down the road. I am solely on my other properties title - and the capital growth has been greater in the past 4 years (dollar wise) than the IP. I have read that in NSW I can transfer the title of our PPOR to my wife (low income) and not incur stamp duty - but would that then trigger a CGT event for me.