capital gains provisions

[arms]

can any one explain to me the way capital gains works on ppor ,
i am thinking about selling my existing house ,then moving into one of our investment houses for over 6 months and finishing that house off ,in the mean time i will build a new house on a block of land i own ,when i have finished the new house we will move into that and re rent out the investment home again ,my main question is what is the timeframe for living in a house so that it can be classed as a ppor for non tax on cg ,and how long does that classification last for ,i plan to house jump through our investment houses so that minimal tax can be paid on cg

 

[Perp]

There are a few flaws in your cunning plan...

1) Gains incurred before moving in are still taxable. So if you bought it for $200K as an IP, and it's gone up to $400K, then you move in for 3 months (minimum to establish as a PPOR) and sell for $420K, you only get the last $20K CGT-free; you still pay CGT on the first $200K.

2) It can be your PPOR for up to 6 years after you leave, provided you return to it prior to sale, and you have no other PPOR during that timeframe. That last one's a killer for your plan - you can only have one PPOR exemption at a time.

If you move between properties frequently enough, you could make things even worse. At the moment, you at least qualify for the 50% CGT discount on IPs held for more than 12 months. But if your activity (ie doing this frequently) leads the ATO to infer that you're in the business of property developing, then all gains are taxed as income rather than capital gain, and you don't get a 50% discount. It may even be that if you hopped from house to house improving and generating gains, that not a single one of the houses would qualify for the PPOR exemption.

 

[arms]

There are a few flaws in your cunning plan...

1) Gains incurred before moving in are still taxable. So if you bought it for $200K as an IP, and it's gone up to $400K, then you move in for 3 months (minimum to establish as a PPOR) and sell for $420K, you only get the last $20K CGT-free; you still pay CGT on the first $200K.

2) It can be your PPOR for up to 6 years after you leave, provided you return to it prior to sale, and you have no other PPOR during that timeframe. That last one's a killer for your plan - you can only have one PPOR exemption at a time.

If you move between properties frequently enough, you could make things even worse. At the moment, you at least qualify for the 50% CGT discount on IPs held for more than 12 months. But if your activity (ie doing this frequently) leads the ATO to infer that you're in the business of property developing, then all gains are taxed as income rather than capital gain, and you don't get a 50% discount. It may even be that if you hopped from house to house improving and generating gains, that not a single one of the houses would qualify for the PPOR exemption.

like i have said on another forum "cunning baztards get you any way they can"
can you see a feasable way around my little quandry

 

[marg4000]

i plan to house jump through our investment houses so that minimal tax can be paid on cg

Love this terminology -sounds like a flea.

Ozperp has stated the position clearly.

You can jump all you like but only one PPOR at a time. Jump often enough and it will become a record-keeping nightmare. You will go dizzy connecting and disconnecting services and changing addresses on all types of official documents. And at the end of the day you will possibly reduce the CGT payable by a whopping 3% or 4%.
Marg

 

[Perp]

can you see a feasable way around my little quandry

I'm not sure what your quandary is! If you've got multiple IPs with significant capital gains, that sounds like a great position to be in.

Why sell rather than refinance? No CGT if you don't sell...

 

[wobbycarly]

Love this terminology -sounds like a flea.

Ozperp has stated the position clearly.

You can jump all you like but only one PPOR at a time. Jump often enough and it will become a record-keeping nightmare. You will go dizzy connecting and disconnecting services and changing addresses on all types of official documents. And at the end of the day you will possibly reduce the CGT payable by a whopping 3% or 4%.
Marg

This is where a PO Box rocks!