CGT and PPOR/IP

[angemg]

Hi,

I wish to sell a house bought in Sep 2003 and lived in for 18months and since rented as IP.

Do I have to pay CGT?

Thanks
Ange

[yo yo ma]

Yes you have to pay CGT... However, are you currently renting?

[angemg]

No i live in another home that i own 40% outright. no debt.

hmmm confused i thought you could nominate this IP as my PPOR at sale and avoid CGT because I lived in it first.

[yo yo ma]

ok... if you were renting you could have moved back into the place to avoid CGT, as it is within 6 years.

If a residence was not your main residence for the full time that you owned it, some special rules may entitle you to a full exemption or to extend the partial exemption you would otherwise get. These rules can apply to land or a dwelling if you choose to treat the dwelling as your main residence, even though you no longer live in it.Have a read of this rule on p67 and 74 of the Guide to CGT. There is an example similar to your situation. I believe you may be entitled to a part exemption up until the time you purchased your new property. You will also be entitled to the 50% CGT discount for having the property longer than 12 months. If your income will be reduced one year, for example you are retiring/ having a baby etc, it is better to sell the property in the year of lower income eg time the sale before or after July 1st.

ATO- Do you own more than one property? (http://www.ato.gov.au/individuals/content.asp?doc=/content/63517.htm&pc=001/002/026/016/003&mnu=1051&mfp=001/002&st=&cy=1)
ATO Guide to CGT 2007 (http://www.ato.gov.au/content/downloads/NAT4151_07.pdf) (large download 2.4MB)

Note: I am not an accountant... seek specific advice from an accountant.