2 situations 2 hard for me

[jsoe]

Hi,
If some of you wonderful investors could help me out here, it'd be greatly appreciated.

I have PPOR (a studio), lived in it for 8 months, then moved closer to my work near the city, PPOR is no longer and now tenanted.
I want to sell that studio now. I won't be moving back into it. It's quite far from work. Do I have to pay CGT if I don't move back in? With the proceeds, I intend to use it for personal expenses + reinvestment. Do I have to pay personal income tax as well on the net amount?

I know the general rule of declaring a property as PPOR, moving back in within 6 years, then you won't have to pay CGT upon sale.
Can I declare another property as PPOR after that? I mean if I buy a property outside that 6 years time frame? Can I never ever declare another property as my PPOR?

Thanks heaps!

 

[Propertunity]

Do I have to pay CGT if I don't move back in?

If it has been less than 6 years since you've moved out, and you have not declared another property as a PPOR (I think??) then no.

With the proceeds, I intend to use it for personal expenses + reinvestment. Do I have to pay personal income tax as well on the net amount?

You pay GCT at your marginal personal tax rate. You do not pay income tax again on it, no.

Can I declare another property as PPOR after that?

Yes, declare another PPOR after you sell, if indeed you have another PPOR.

I mean if I buy a property outside that 6 years time frame? Can I never ever declare another property as my PPOR?

I'm confused now but I think you have all the answers you need above

 

[Mry]

I have PPOR (a studio), lived in it for 8 months, then moved closer to my work near the city, PPOR is no longer and now tenanted.
I want to sell that studio now. I won't be moving back into it. It's quite far from work. Do I have to pay CGT if I don't move back in? With the proceeds, I intend to use it for personal expenses + reinvestment. Do I have to pay personal income tax as well on the net amount?

You only pay the tax on the capital gain when you sell. The gain is added to your other income for that year and you pay tax on it.

I know the general rule of declaring a property as PPOR, moving back in within 6 years, then you won't have to pay CGT upon sale.
Can I declare another property as PPOR after that? I mean if I buy a property outside that 6 years time frame? Can I never ever declare another property as my PPOR?

You can only claim one PPOR at one time. So here are your options -
1 - You claim the studio as your PPOR. You seem to be under the six year limit so you can sell that without capital gains consequences. However, if you own another property (not rent, own) that you live in, that place will not be able to get the full PPOR exemption for the amount of time that the other place got the exemption.
2 - You pay capital gains tax on the studio apartment from the time you moved out to the time you sold it. The cost base will be the market value at the time you moved out. If you have moved to another place that you own after you left that apartment, you can get the full PPOR exemption on that place.

Yes you can declare another place as a PPOR after you sell one, people move places all the time. The exemption is subject to a few funny rules and as mentioned earlier, it can only apply to one residence at a time.

(and yes there is a 6 month overlap when you move from one place to another when you sell the old residence but lets not over complicate things).

 

[jsoe]

Thank you both. Yes, that answers my questions.

 

[Ed Barton]

(and yes there is a 6 month overlap when you move from one place to another when you sell the old residence but lets not over complicate things).

oh please let's complicate things. you don't here much of the ability to hold two ppors at the same time for six months.

 

[Propertunity]

oh please let's complicate things. you don't here much of the ability to hold two ppors at the same time for six months.

Yeah, it is loosley called the '6 month overlap rule'. It just means that the ATO recognises that it may take up to 6 months to sell a PPOR even though you've moved on to a new one.

 

[Ed Barton]

Yeah, it is loosley called the '6 month overlap rule'. It just means that the ATO recognises that it may take up to 6 months to sell a PPOR even though you've moved on to a new one.

it;'s a very sensible rule. the six year ppor rule is discussed a lot here, but not the ppor x2 cross over.

for the uber buy>renovate>sell strategy you could take advantage of this.

 

[Propertunity]

the six year ppor rule is discussed a lot here, but not the ppor x2 cross over.

Ah I dunno about that
It is mentioned here: http://www.somersoft.com/forums/showthread.php?t=39836
and here: http://www.somersoft.com/forums/showthread.php?t=44243
and here: http://www.somersoft.com/forums/showthread.php?t=65485
and here: http://www.somersoft.com/forums/showthread.php?t=61226
and here: http://www.somersoft.com/forums/showthread.php?t=63855
and again here: http://www.somersoft.com/forums/showthread.php?t=59444

There's a few more places, but you get the idea . I'll stop being a pedant now.