Question regarding CGT and 6 year rule

Hi,

I purchased a property in Brisbane back in 2015 as an investment property and rented it out while I was working out of town. After 4 years I decided to move back in town and move into the property, I changed the property status to PPOR (in 2019). If I were to sell the property now or years later, would the 6 year rule apply here or not? If not, is it because the property was established/declared as an "investment property" in the beginning (back in 2015) and not declared as PPOR or "lived in" for the first 12 months before renting it out?

If I did sell the property as mentioned earlier and a CGT event was triggered, would I only then need to calculate CGT for the four years it was declared as an investment property (2015 to 2019)?

Thank you in advance.

Kind Regards,

Jack.

 

Yes could apply after you moved in

 

Its a vague post. Are you saying you did live there then moved out in 2015 ? Then returned 2019 ?

1. If = Yes the the date you moved out is relevant and the 6 year could be used spanning the 4 years.

2. If No then the initial date period as investment taxable days. = taxable days. That cant be fixed. Asa % of the ownership period this will be the taxable period. BUT for the time you live d in it you can add ownership costs to the costbase to lower the total gain / lsoss before apportioning

3. This issue must also consider any property you lived in when you were absent incl that of a spouse / partner etc

I will argue that getting some advice and support could save you some $$$ from mistakes.

 

Hi Jack,

Generally speaking, I would recommend speaking to an accountant regarding the 6-year-rule as it would ultimately depend on your financial situation. In the event there is CGT liability, a certified Valuer can assist with a valuation report to set a new cost base to assist your accountant with CGT calculations. This valuation would need to be prepared by an independent qualified Valuer.

 

A valuation can't be used in this situation as the property was income producing from settlement.

rereading I appears Jack might have moved into an investment property and hasn't moved out. If this is the case the 6 year rule can't apply.

 

Hi,

Apologies for the vague question. I bought the property brand new as an investment and did not live in it as I worked FIFO and had no fixed address. I rented it out for the 4 years i.e. from the day of ownership (2015), till I moved into the property (2019). In 2019 I changed the property title/status to PPOR as I live in the property and decided I would no longer rent the property out. The question I am asking is does the 6 year rule only apply if I had lived in the property initially for 12 months (PPOR) before renting it out and moving back in 2019? In other words the property has to be PPOR for the first 12 months before the 6 year rule can be applied if the property were to be rented out.

 

The "absence rule #" you refer to can only apply to a property you have previously occupied as a main residence prior to departure. There would also be further complication IF that applied that the original purchase price is no longer the costbase but s118.192 resets the costbase to market rent at that date in 2015. This doesnt apply in your case. There is no 12month requirement. A new or renovated property when acquired may have a minimm period of three months in order to commence the main residence exemption but in your case its irrelevant. Your occupnacy commenced in 2019. You cant be absent in 2015-19 as you didnt initially reside.

On this basis your CGT is based on pro-rata based on taxable days divided by total ownership days. As previously indicated third element costs from 2019 onwards can be added to the historical costbase prior to that apportioning. And then the 50% discount would apply

# The absence rule contains a UNLIMITED time period if the property is not rented but limited to period/s of 6 years at a time where a property is rented during the absence. For information the 6 years can recommence IF the owner re-commences use as amain residence again and then later departs.
INCOME TAX ASSESSMENT ACT 1997 - SECT 118.145 Absences

 

No. But in this situation it can only apply after you move out