6 year CGT exemption
- Thread starter turk
- Start date
Depends if you claimed any CGT exemption for the 2 years you lived in property B.
I have to pay CGT for the time my PPoR has been vacant, untenanted, and for sale, which is really irritating, but that's just the way the system works.
I have to pay CGT for the time my PPoR has been vacant, untenanted, and for sale, which is really irritating, but that's just the way the system works.
Pete, the simple answer is no. As soon as you elected Property B to become your PPOR, you relinquish the ability to claim it on Property A. Of cave course by electing property B as your PPOR I am assuming you reduced your CGT liability when you sold it because the amount of time you were considering it as your PPOR.
CGT would be liable on Property A in line with the proportionate time it has been an IP relative to the total time you have owned it.
However it depends on your answer to R Elf's question below.
CGT would be liable on Property A in line with the proportionate time it has been an IP relative to the total time you have owned it.
However it depends on your answer to R Elf's question below.
But isn't Pete is asking about the CGT excemption from 2005? Once prop B is sold, Prop A is again the PPOR and CGT excempt.
A - PPOR till 2003
if proprtion of B was claimed as PPOR till 2005 then at least the coholding period of Prop A when B was PPOR is not exempt from CGT.
This would mean Prop A would need to be valued in 2003 as at the date it ceased to be an IP. As it has ceased to be your PPOR if you have claimed B as your PPOR, can A be your PPOR from the date of selling B - methinks not because you have not moved back into it as a PPOR
if proprtion of B was claimed as PPOR till 2005 then at least the coholding period of Prop A when B was PPOR is not exempt from CGT.
This would mean Prop A would need to be valued in 2003 as at the date it ceased to be an IP. As it has ceased to be your PPOR if you have claimed B as your PPOR, can A be your PPOR from the date of selling B - methinks not because you have not moved back into it as a PPOR
The bottom line is just that you can't overlap PPoRs for more than 6 months.
I would say yes as it appears to meet the requirements of s118-145 ITAA. You have lived in the property previous as your main residence. You are absent and it is less than 6 years. And you are not claiming another property as your main residence at the same time.
The good thing is you can wait until you sell before you need to decide. (if there is a loss, then it was just an investment!
)
did you move back into property "a" in 2005?. i'd look very carefully at the timing as, because as i understand it, you can claim a property as your ppor for 6 years after you physically vacated the property - you can't just pick a date to start calling it your ppor from.
even if you moved back in for 2 weeks and had the electricity connected in your name for that period, that qualifies to reset the 6 year claim period - so you can claim the cgt free period indefinately - as long as you move back in each time "before" the period is up.
personally, if you didn't move back into the property in 2005, i would have thought that the 6 year ppor period would have started in 2003 even if you were calling your property "b" your ppor during that time.
you may want to get some expert accountant/ato advice on this.
even if you moved back in for 2 weeks and had the electricity connected in your name for that period, that qualifies to reset the 6 year claim period - so you can claim the cgt free period indefinately - as long as you move back in each time "before" the period is up.
personally, if you didn't move back into the property in 2005, i would have thought that the 6 year ppor period would have started in 2003 even if you were calling your property "b" your ppor during that time.
you may want to get some expert accountant/ato advice on this.
This decision may be relevant http://law.ato.gov.au/atolaw/view.htm?docid=AID/AID2001743/00001
The ID quoted by JRC is very relevant and I am surprised the ATO allowed it.
I often refer to the PPOR exemption with clients as an umbrella - it can only cover one house at a time. If property B was sold in 2005, you would have had to make an election at that time to decide where the exemption applied. Either you chose to move the exemption over to B and paid tax on the gain from 2000-2003, or you chose to retain it on A and derived a higher capital gain on property B for the 2000-2005 period.
Once you choose to move the exemption over to Property B, it cannot move back to Property A unless you move back into that property, and it does not appear that you have.
So you can either choose to exempt A for 6 years under the leave of absence rule (and rely on the ID if you chose otherwise for the 2005 year) or choose to exempt B for the 2 years you lived there. Time to go and crunch numbers with a friendly accountant.
I often refer to the PPOR exemption with clients as an umbrella - it can only cover one house at a time. If property B was sold in 2005, you would have had to make an election at that time to decide where the exemption applied. Either you chose to move the exemption over to B and paid tax on the gain from 2000-2003, or you chose to retain it on A and derived a higher capital gain on property B for the 2000-2005 period.
Once you choose to move the exemption over to Property B, it cannot move back to Property A unless you move back into that property, and it does not appear that you have.
So you can either choose to exempt A for 6 years under the leave of absence rule (and rely on the ID if you chose otherwise for the 2005 year) or choose to exempt B for the 2 years you lived there. Time to go and crunch numbers with a friendly accountant.
However, the ID is an edited and abreviated version missing detail.
For instance, were they allowed to amend their assessment inside the usual period ?
Or had they obtained relief to get an extension of time to make the election under s.103-25 (see ATO ID 2003/468).
Would the GIC apply ?
Questions, questions ....
Cheers,
Rob
For instance, were they allowed to amend their assessment inside the usual period ?
Or had they obtained relief to get an extension of time to make the election under s.103-25 (see ATO ID 2003/468).
Would the GIC apply ?
Questions, questions ....
Cheers,
Rob