Tax Tip 109: CGT and Being absent from the main residence for more than 6 years

Yes, that's this thread, which I've read and think I understand.

In short, it doesn't matter when the capital gain was actually achieved, the total amount will be assessed and apportioned over the total period.

So I've been absent for 6 years and I don't think there will be any growth over the next 6 (if anything it might further drop in value), so all I'd be doing by holding it, from a capital gain tax point of view anyway, would be ensuring I have to pay some tax whereas if I sold it now I wouldn't pay any.

 

Lol. I am reading on mobile so didn't realise it's the same thread.

 

And this is possibly correct, if not growth you could still be taxed.

 

@Terry_w @Paul@PFI

QU: what are the implications if you exceed the 6 years by a very small margin (5 weeks) before moving back in?

And the reason for exceeding 6 years is on compassionate grounds - the tenants were a young family building a new home through 2020 which was delayed. I didn't want to ask them to leave to find a new place for just a month or two.

 

the commissioner doesn't have any power to extend the 6 years.
CGT would apply proportionately - very small impact potentially

Tax Tip 109: CGT and Being absent from the main residence for more than 6 years Tax Tip 109: CGT and Being absent from the main residence for more than 6 years

 

The 6 year is a absolute limit unless it recommences as a home and then ceases again which in 5 weeks seems dubious. Instead a time apportionment applies and 5 weeks divided by 312 weeks is just 1.602%. 50% is taxable. So you may end up paying CGT on 0.8% of the profit after selling costs AND with non-deductible ownership costs for the 5 weeks thrown in that may be minor.

ie A max of $376 per $100K of profit.

 

Thanks @Paul@PFI . I am using the spreadsheet you've previously provided to track all costs from day 1 of purchase.

Thank @Terry_w .

PS, we are in that thread already

 

lol

 

hi @Terry_w , im unclear as to what this means. Say, if I had to fully replace (not repair) a dilapidated front porch, or replace an old leaking bathroom on the investment property, then I would be able to claim the depreciation for these works. Whatever depreciation deductions i had claimed for these works over the years, would need to be substracted from the cost base (i.e. from the 300k using ur example) ? thanking you!

 

There is a separate tax tip on this. Depreciation claimed increases cgt

 

Is there exceptions to this 6 year rule under special circumstances? Eg - if you are a carer and live in the carers home for ten years

 

I haven't seen any concessions for situations like that in the legislation.

 

Thanks Terry

 

Terry, the ITAA is quite detailed, and with rulings and Acts of God it gets confusing. I use experts to assist me - plumber, sparky, PM, tax advisor, etc. Your example with the numbers makes it quite easy for me to get a CGT figure that is close to reality; I'll never get it quite right. Thank you for your detailed post, most helpful. Others asking good questions and providing good answers also greatly assist.

 

It may mean those few weeks allow third element costs since a pro-rata calc is now required. 3rd elements costs can reduce a gain but cant create a loss. It may also mean that since there is a taxable calculation the s118.192 valuation is also now required IF applicable

 

Hi Terry!
I have couple of question for when you have the time to answer them thank you!! Does this 6 years rule apply even now? When someone decide to sell the residence with not CGT does he need to buy again a property or can keep the cash and not re-purchase for few years or not re-purchase at all? I have in mind for example somebody that wants to move permanently overseas for example and wants to sell and not repurchase or somebody which partner has already a house of her own to move into.

Thanks

 

It is still law yes

Not necessarily

there is no requirement to buy again

 

If I move out after a year and start to rent it out and I come back before the 6 years expires to keep free CGT does the 6 years rule reset again after I lived in the property for some time and if yes for how long do I need to live there and for how long can I move out again before the need to move back in?

Thank you for your time!

 

Yes it resets if you reestablish it as your main residence

 

All these questions are clearly answered in this thread, and Tax Tip 23: The 6 year Absent from Main Residence Rule, if you go back and read.