Selling/buying PPOR and tax

Discussion in 'Accounting & Tax' started by Chris89012, 3rd Jan, 2017.

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  1. Chris89012

    Chris89012 Member

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    Hi all, long time lurker here

    So we are in the process of selling our PPOR but we have found a property that we'd like to make an offer on.

    We are currently renting, and our intention is to sell the PPOR without paying CGT (six year rule) and then buy the new residence as the PPOR.

    I'm worried, however, that if we buy the new property before we sell the old one that a) the old property won't be considered PPOR and CGT will need to be paid and b) the new property may not get viewed as PPOR for loan purposes.

    Is it possible to make an offer and classify the new purchase as PPOR, and at the same time sell the old residence as PPOR and be CGT exempt?

    thanks

    Chris
     
  2. Ross Forrester

    Ross Forrester Well-Known Member

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    If you acquire a dwelling that is to become your main residence and you still own an existing main residence both dwellings can continue as your main residence for upto 6 months 118-140

    However, this rule only applies if your existing main residence was your main residence for a continuous period of at least three months in the 12 months before it was disposed of and it was not used for income-producing purposes in any part of that 12-month period when it was not the your main residence.

    Also refer to TD 1999/43

    5. Anne acquired a dwelling on 1 January 1986 where she lived until she went overseas on 1 January 1997. Anne did not rent the home during her absence.

    6. She acquired another dwelling on 1 February 1998 and moved into that dwelling on her return from overseas on 1 March 1998. Anne disposed of the first dwelling on 1 August 1998.

    7. In accordance with section 118-145, Anne chose to continue to treat the first dwelling as her main residence for the period 1 January 1997 until she disposed of it on 1 August 1998.

    8. In addition, under section 118-140, Anne may treat the second dwelling as her main residence from when she acquired it on 1 February 1998. Under section 118-140, Anne is able to treat both dwellings as her main residence for up to six months, ending when she ceased to have an ownership interest in the first dwelling.
     
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  3. Chris89012

    Chris89012 Member

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    Hi Ross

    Thanks very much for this. In our case, we initially resided in the PPOR for 4 years and then sent abroad for work for 4 years. We've only just returned, so don't meet the ruling criteria.

    So I guess this means we need to firstly sell the existing PPOR (and exchange contracts) before we purchase and exchange contracts on a new PPOR.

    Just to make it more complicated.

    Could we sell the existing PPOR, and put a deposit down for a new PPOR (off the plan) but not exchange contracts until say 8 months time when the existing PPOR would have already sold and contracts would have been exchanged?

    Chris
     
  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    6 year rule and 6 month rule can interact together.
     
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  5. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Chris - Read the post by Ross again.
     

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