Advice on CGT and exemption

[Ching]

Hi all, my sister and family have been living in their current house since 2010 (PPOR). Recently due to health reason they want to move closer to me but have rented a place nearby instead of purchasing a new home. She will rent out their current PPOR which becomes an IP.

Questions:
1. I read about the CGT 6 year exemption. Will she be eligible for the CGT exemption given she has been living in the PPOR since 2010 to 2013 and eventually move back in year 2019 (6 years)? Even though she rents out her house for the period from 2014 to 2019.
2. If she rents elsewhere and will never move back to her own PPOR, eventually if she sells her house in say 2025, does that mean the CGT will only be applied from 2020 to 2025 (6th year till 11th year)?
3. Will she need to get a valuation done now or in year 2019 (i.e. after the 6th year)? Say for example PPOR bought for $380,000 in year 2010, valued at $430,000 in year 2013, valued at $500,000 in year 2019, sold for $600,000 in year 2025, does that mean the CGT gain is $600,000 - $500,000 = $100,000 only?
4. For the period that she rents out her PPOR (e.g. 2014 to 2019), can she claim tax deduction yearly? Will that jeopardise her eligibility for getting CGT exemption later?

Sorry if this is too confusing, hope to get some advice before my sister moves out.

Thanks in advance, any advice is appreciated.

 

[geoffw]

1. As long as she doesn't own another PPOR in the interim.
2. I don't know. I suspect that the exemption will apply for the first six years. But it will save her a huge amount of tax to move back just for a period- I'm not sure, it may be six months.
3. Possibly. Not sure.
4. She can claim expenses, including interest and rates, for the period that she is renting it out (or is available to be let out). This will not jeopardise CGT exemption later.

Btw I'm not any expert. By responding that will ensure that somebody who is an expert will respond to tell me I'm wrong ;-)

 

[GaryT]

1. Yes
2. Yes
3. Valuation needed at date you moved out.
4. Yes - no effect on CGT exemption.

 

[Terry_w]

Is the property less than 2 hectares. Has it ever been used to produce income? Any interest claimed?

 

[Ching]

Thanks everyone for the replies.

The property is less than 2 hectares and it has never been used to produce income and no interest has been claimed before.

 

[Terry_w]

Thanks everyone for the replies.

The property is less than 2 hectares and it has never been used to produce income and no interest has been claimed before.

In that case see Gary's reply!