Capital Gains Tax

[G W I Homeowner]

First post ever
I purched an old house in Canley Heights Sydney this is the family home after 1 year I decided to renovate and go big. I wanted a parents retreat the archetect talked me into a granny flat, so plans were drawn up approval gained (Fairfield Council) Owner Builder, Job done so I thought, now the big question. First I dont want to rent it it is a parents retreat or Mum 89 years old can live there and be looked after by my wife. Do I get the final accupation cert for the flat or leave it and get it when I sell. Reson for this is 2 fold do I have to pay CGT once it has its certificate and do I have to start paying double garbage and sewer I already pay extra for the electrical conection. If times get tough (when they get tougher) how do I rent it and not get hit with CGT.
The Flat and House are all under the one roof. Fire walls to the unerside of the roof quite a costly excercise if I rent it can I claim a percentage of my morgage

 

[DaveM]

During the period its not income producing (ie owner/family occupied) then there is no CGT. So get your occ cert now.

CGT will apply on a proportionate amount from the time when rent the granny flat out in the future until a CGT event is triggered eg sale. You cant avoid it (unless you want to get into dodgy tax avoidance/fraud) so get a valuation done before renting it out so you have a value to work from in the future.

 

[Scott No Mates]

Get the 317ae ASAP you don't want to be trying to get a tenant in 5 years time only to be told by the council that it's not approved for occupancy.

As Davem said you aren't up for cgt until you sell which would appear to be a long time off.

 

[Propertunity]

I don't want to rent it it is a parents retreat or Mum 89 years old can live there and be looked after by my wife.

If you don't rent it out, as it is your PPOR, there is no CGT liability in this situation.

Do I get the final occupation cert for the flat or leave it and get it when I sell.

Get it now - but it has nothing to do with CGT liabilities or otherwise. It is just easier to get it now.

Reason for this is 2 fold do I have to pay CGT once it has its certificate and do I have to start paying double garbage and sewer I already pay extra for the electrical connection.

Your CGT liability calculations (if any) will commence from the time the property is producing an income (ie being rented out)., not from the time the OC is issued.

If times get tough (when they get tougher) how do I rent it and not get hit with CGT.

If you produce an income from it, over and above your legitimate costs, you incur some tax liability. You only pay CGT when (if) you sell and if there has been a CG.

The Flat and House are all under the one roof. Fire walls to the underside of the roof quite a costly exercise if I rent it can I claim a percentage of my mortgage

Yes, you can claim a % of your mortgage interest in this scenario.

 

[G W I Homeowner]

To All

Thanks that has cleared up some of the confusion, if I keep the place for 5years (I am Old) and have the flat rented for 1 of the 5 years what is the CGT is it prorator