Cap Gains Tax

[steveadl]

Hi all, having a bit of a vague moment so just wanted to double check my thinking.

Have a friend who's dad is thinking of building a house. He currently has a PPOR which he intends on keeping. He wants to build this new house, then sell. I've told them I'm fairly certain they'll be up for CGT on the sale of the new house, even if he did move into this other house for a while as he would still be retaining (renting out) his existing PPOR.

So there's no way he can avoid CGT on the new property sale?

The above sound right.

 

[Dazz]

they'll be up for CGT on the sale of the new house

Sounds about right. Your friend's Dad would have already cleared this up with his accountant if he had any doubts though....

 

[HiEquity]

What Dazz said about the accountant although we all know there are accountants and then there are accountants...

My understanding is if he moved in and lived in it etc he would be able to claim a CGT exemption for it as it was his PPOR. But he would have to apportion the CGT on his current house for this same period if he ever sold it - you can't claim two PPORs for the same time period!

If he has lived in the current PPOR for awhile then this apportionment could wind up being bugger all so this could be worth looking into...

 

[steveadl]

Thanks guys. Yes I've prefaced everything I've told them with "check with your accountant", but they're not up to this stage yet, they're still just trying to get a handle on their options and what they may like to do with the land they've got under offer.