A debate around the dinner table.

[im sparticus]

I Recently i had a bit of a debate around the dinner table about capital gains tax, wonder if any forumites could shed some light for me, it went like this:

a much older and senior family member has a property (house and land) that he has owned for some time as purley a holiday home (it has just sat there never earned an income or had any expences claimed on it) he has owned other properties in the past and considered them his ppor's he went on to tell me about how much it had appreciated in value over the years and that he would not have to pay cg tax on the full amount because recently he declared it his ppor and had lived in it for over 12 months.

my argument was that he could only get the cg tax exemption for the portion of time it had been his ppor (the last 4 years).

Im guessing he is right as he is old enough to be my grandfather and has gotten the advice from his longtime accountant that is also his lawyer and i dont even have an accountant so who am i to argue. but it just didnt make sence, I then said if i baught a bunch of properties some years ago and didnt want to pay cg tax on any of them all i would have to do is live in each of them for 12 months declare it as my ppor sell and move on to the next one, his answer was yes as long as they wernt considered investments (ie, earned an income and expence deductions).

confused??

 

[boomtown]

He's wrong. Its only CG free for the period of time that it was a PPOR - there is an apportionment.

 

[handyandy]

He would need to get it valued at the time of declaration to establish a base cost.

You can only have one PPOR at a time and as such would need to do the valuation trick each time you moved to a 'new' PPOR

Cheers

 

[Petal]

From what I understand you can only claim one PPOR at a time so with his theory if he wants to claim the holiday house as his PPOR for the whole period he has owned it, he can't claim another house he WAS living it during that same period. (i.e. they can't overlap)

 

[im sparticus]

thanks team feeling much better now, looks like he needs to get himself a new accountant/lawyer but i sure am not gonna be the one to tell him after the way he debunked my original argument haha.

 

[Simon]

If he owned it pre 87 then it is CGT free.

 

[Gee Cee]

Capital Gains tax Free Pre 1987

How long has the person owned the property.
Capital gains tax did not exist until round August 1985 from memory.
Any property purchased prior to this that still owned by that person is not up for capital gains tax. (From my understanding)

Any opinions

Gee Cee

Greg

 

[Petal]

Yes what Simon said (gee I could sing it too if I wanted !!)

 

[wylie]

Apart from the pre capital gains issue, don't bother to argue with someone who "knows it all". I used to butt heads with my father-in-law when we were discussing something which I knew full well to be true, and he just wouldn't listen. Knew everything about everything .

Hubby used to just watch in amusement and ask me each time why I even bothered as I was never going to "win" the argument.

 

[turk]

I.S.

" he went on to tell me about how much it had appreciated in value over the years and that he would not have to pay cg tax on the full amount because recently he declared it his ppor and had lived in it for over 12 months.

my argument was that he could only get the cg tax exemption for the portion of time it had been his ppor (the last 4 years)."

Could you both be correct, if it was his PPOR for the last 4 years it would be exempt for
that time as you stated, i.e. he would not have to cg on the full amount as he stated.

Regards

Peter

 

[Gee Cee]

Hi Wylie
My father I/L is the same.
If by some chance you do have the facts there he just gets in a huff. Says it is a load of B/S and goes off to his shed.
Worse if he has a beer or 3
I just don't visit, make excuses to not go over. Rest of the family does also. Then he wonders why no one will visit.

Gee Cee

Arrr X/Mas dinner only a month away

 

[wylie]

I share your pain Gee Cee. My FIL is no longer with us, but we still have to put up with the rest of the out-laws, some of whom have his personality and are just as trying.

Funny thing is that since he passed away, he has morphed into a saint . My mother-in-law sometimes talks about him in such a way that my hubby and I look at each other with the "is that the same man she is talking about???" expressions.

Last year we booked a week away to avoid the family pre-Christmas party, and I did the same this year, but had to change the booking due to work commitments on hubby's behalf. Desperately trying to find excuses to avoid it, or at least be unavoidably late, and then leave early .

I have told my kids that when they are grown I will never coerce them to all visit together and pretend to play happy families when (like hubby's family) they may not bother to even call each other all year. I find it nauseatingly hypocritical that hubby's sisters air kiss us all as if we are cherished members of the family but are absolute cows the rest of the year (except one sister who I have all the time in the world for).

I will be sad if my boys don't want to see each other when they are adults, but nothing I can do or say will change that. Pity hubby's mother keeps on pretending they are the Brady Bunch when it is quite the opposite. Lives in dreamland, that woman.......

 

[LynnH]

How long has the person owned the property.
Capital gains tax did not exist until round August 1985 from memory.
Any property purchased prior to this that still owned by that person is not up for capital gains tax. (From my understanding)

Any opinions

Gee Cee

Greg

The exact date is 19th September, 1985 - any property (including holiday homes, IPs etc) acquired on or before this date is CGT free.

Cheers
LynnH

 

[Gee Cee]

HI LYNN H
I thought it was 1985. But my memory does not aleays get things right.
was not 1987 when they dropped depreciation on buildings back from 4% to 2.5%?

I guess some people here will remember these dates as starting pre- school or kindy.
Do they teach depreciation schedules in kindy yet

Gee Cee

Greg

Feeling OldER

 

[im sparticus]

dont think its pre 1985 as he wouldnt bother trying to get all fancy considering it as a ppor for the cgt exemption from memory he has held it for 10 years.

if it was pre 1985 i wish he could of just said "sorry young fella pre1985 no cgt capish, go look it up for yourself"

thanks for the replys to be honest i wasnt aware of the pre 1985 rule was only 4yrs old then!

 

[LynnH]

Feeling OldER

Gee Cee

If you're feeling older, I'm definitely ancient! Can remember things that happened years ago - but not what happened last week. (Well, that's my excuse .......)

Cheers
LynnH

 

[Pushka]

dont think its pre 1985 as he wouldnt bother trying to get all fancy considering it as a ppor for the cgt exemption from memory he has held it for 10 years.

if it was pre 1985 i wish he could of just said "sorry young fella pre1985 no cgt capish, go look it up for yourself"

thanks for the replys to be honest i wasnt aware of the pre 1985 rule was only 4yrs old then!

He he, wouldnt it be funny if he had held it before CGT was introduced and he had gone to the bother of living there for no reason!

You can claim everything when you sell a house that has never earned income; including Council rates, Land Tax, improvements etc, to decrease the profit.

 

[susanp1206]

Thank you (I was right after all)

Woo hoo

I've often thought about that question (over the last 5 years, sadly enough), since a friend insisted that she could do with her IP! She said her accountant had said it was okay, and that he was very straight-laced. It didn't make sense to me, and didn't jibe with the tax accounting unit I had just completed.

Please excuse the over-reaction - I don't often get the right answer

 

[jaycee]

He he, wouldnt it be funny if he had held it before CGT was introduced and he had gone to the bother of living there for no reason!

You can claim everything when you sell a house that has never earned income; including Council rates, Land Tax, improvements etc, to decrease the profit.[/QUOTE]

Could you explain further Pushka ?

A lot of people seem to be under t eimpressoin that "as long as I live in it for 1 year, no CGT" an agent told me about the real rule whne I bought my ip in 2005, I seem to remember him telling me it was a new rule (?)

 

[jaycee]

He he, wouldnt it be funny if he had held it before CGT was introduced and he had gone to the bother of living there for no reason!

You can claim everything when you sell a house that has never earned income; including Council rates, Land Tax, improvements etc, to decrease the profit.[/QUOTE]

Could you explain further Pushka ?

A lot of people seem to be under the impression that "as long as I live in it for 1 year, no CGT" an agent told me about the real rule whne I bought my ip in 2005, I seem to remember him telling me it was a new rule (?)