Tax on 2nd Property (Not PPOR, Not Earning Income)

If I buy a second/third property for my child to use rent-free/to leave it empty (no rental income, no rental deductions)/to use it as holiday home, will there be capital gain/loss implications when selling this house? Will the answer be any different if the second/third house is under company/trust name? My first house will be PPOR (Principal place of residence, main residence) the whole time. Thank you

 

Yes and land tax considerations too.

 

Capital gains tax applies to ALL property assets unless it is exempt in full or part (eg main residence). The use of the aset only is relevant to the main residence exemption. Since the owner of the property is not residing in the home and already has a main residence CGT is inevitable. There is no requirement for assets to produce income etc to be subject to CGT.

The way the capital gain is calculated will alter if a property isnt used to produce income. All the costs of ownership which would otherwise be deductible if rented add to the costbase which helps reduce the impact of CGT when sold (or inherited by others). As Scoott No Mates suggests this may also include land tax since land tax is a state tax on asset wealth. Check the threshold for the state where the land is. Land tax generally applies to the UNIMPROVED land value and if this is well under threshold no tax might be payable

 

will you be acting as bare trustee for the child?