Property market value is lower than purchased price ? Should I get CGT valuation now ?

Hello everyone.

I am new to the forum and new to property investing so here goes.

I've purchased an apartment in 2017 for $620K, moved in and made it my PPoR. I am moving out and making it as an IP. Now the market value indicated (mid with high confidence) at $550K

Based on the 6yr rule, this doesn't matter if I sell the property within the next 6 years.

Is it a better to get a CGT valuation now? and keep it for the record, as this figure would reflect closer to the current market and condition of the property
Or
I should just ignore it, and do a retrospective valuation at the time of CGT event ?

 

"mid with high confidence" makes me think you're looking at one of those auto-calculators, cause that's precisely the language those things use. Those are trash. I've very rarely seen one that has been on the money. Do your own research via (recent) historical sales.

 

cheaper to get a valuation now rather than a restrospective
but you might not need it if you use the 6 year rule

 

Ah the sting of s118-192. It requires the costbase to reset if the property is first used to produce income. In cases where the MV is less tahn the historical cost this can be problematic as it exposes the "loss" to potential tax. Seems unfair doesnt it ? That is the law. But it isnt quite so rigid. Look for its exceptions.

Carefully consider if the property was ever previously used as a place of business (in part) or to produce any rental income (eg Airbnb a room for ONE weekend on the cheap before you move out ) and you can avoid s118-192 AND also add in the 3 years of private occupancy costs as an addition to the costbase plus duty and legals and more. Pro-rata CGT would apply based on # days (not on the change in avlue based on valuation). Seems like avopidance doesnt it ? No you must follow the law...so follow it and game a tax benefit. Stay at a friends that night. Even pay full tax on the 1 night - (Although deductions may be allowed). Who cares it could save tens of thousands in tax. Just do it publicly - eg Airbnb.

And as Terry points out if you plan to sell within 6 years it could be a moot point. But where you move to could be non-exempt in that absence period

 

Thanks, I've searched around and found similar size properties in the suburb, seems like it's around that same price, 550K-580K.

I forgot to mention that the property had tenants on lease when I purchased the property. Then I was able to move in "as soon as practically possible" after the lease ended in Nov 2017 and made it my PPOR.
Does this mean that the "first time produces income" was when I bought it in 2017 ? and does not require a base cost reset ?
Based on this situation, I am trying to determine whether the purchase price can be used as cost base for future CGT calculation (if any) should the valuation come lesser than historical prices.

 

Ripper - s118-192 CANNOT BE USED. Forget a valuation its not allowed. But you need to calculate all your non-deductible private ownership costs in the period you live there. These will add to the costbase. And of course the legals, duty etc when you bought will add to the costbase too.

(s118-192 is only used where a property was initially your main residence. You dont meet that test so must use historivcal costs and apportionment.)

This issue demonstrates why we are one of the few property tax advisers that provide a CGT record keeping too. I'm often asked what makes a tax adviser "property savvy".This is a great example. Lost information such as dates and even 3rd element CGT costs need to be recorded !! Expensive to ignore it.

 

Paul is right. You didn't move in as soon as practical