CGT exemption 6-year rule and spouses

The exemption is for a max of 6 years in any one hit. Moving back in won't completely exempt the CGT if you had been away for over 6 years.
 
CGT and main residences can be complex.

For example a non-resident taxpayer has no CGT discount but some non-resident taxpayers can get the main residence exemption. While seeming to be illogical that a person who doesn't reside in the country can be exempt under the main residence exemption rule this is our tax law.
 
More questions sorry guys :eek:

What happens in the following scenarios? (Making up numbers)

1. A former PPOR purchased for 50k and valued at 100k has become an IP and is sold before the 6 year CGT exemption period has expired. In this time 10k has been claimed in depreciation.
Is the profit completely exempt from CGT or is the depreciation considered?

2. Same scenario as above but it is sold after 7 years.
Is all of the depreciation deducted from the cost base?
Is CGT payable on 50% of the profit? Or, is the fact that it was considered a PPOR for 6/7 of the time it was rented considered?

Thanks again!
 
1. Completely Capital Gains (CG) exempt - depreciation not considered.

2. Calculate CG as if fully taxable including allowing for the value of depreciable items at start and end, then apportion the gain to establish the taxable CG, then apply the 50% general CG discount on the reduced apportioned amount i.e. 50% of 1/7th.
 
1. Completely Capital Gains (CG) exempt - depreciation not considered.

2. Calculate CG as if fully taxable including allowing for the value of depreciable items at start and end, then apportion the gain to establish the taxable CG, then apply the 50% general CG discount on the reduced apportioned amount i.e. 50% of 1/7th.

Thanks Gary, so in scenario 2:

Tax payable = 60k (profit + dep) x 1/7 x 50% x 0.37(depending on tax bracket) = approx $1585
 
Thanks Gary, so in scenario 2:

Tax payable = 60k (profit + dep) x 1/7 x 50% x 0.37(depending on tax bracket) = approx $1585

For a scenario of going over the 6 years this is the formula:
(Market value at the date first rented out) x (non main residence days ? ie over 6 years)/ (days in deemed ownership period).
 
Need advice please - six month rule

Hi All
Need some help please. I thought I had the six month rule sorted out but on advice of friend am now not so sure.
Our situation is:
Purchased PPR in Canberra in March 2007 ($618K)- we lived in it for 4-6 months and then work took us to Sydney. (property was probably valued at $618K)
We have rented the property out since then (June 07) and have not owned any other PPR until now - Sep 2014.

We have declared rent and deductions of interest and expenses etc and paid tax on the positive return.

I thought that we simply got the property valued at the six year mark (ie six years after we moved out - $734K) and that then became the base for any potential future capital gain. ie the capital gain between the valuation when we moved out and at the end of the six year period, was CGT free.

Is it as simple as I understand or are there implications of us not moving in or selling before the six year period is up?
Would appreciate someone's opinion or advice?
Cheers
 
Hi All
Need some help please. I thought I had the six month rule sorted out but on advice of friend am now not so sure.
Our situation is:
Purchased PPR in Canberra in March 2007 ($618K)- we lived in it for 4-6 months and then work took us to Sydney. (property was probably valued at $618K)
We have rented the property out since then (June 07) and have not owned any other PPR until now - Sep 2014.

We have declared rent and deductions of interest and expenses etc and paid tax on the positive return.

I thought that we simply got the property valued at the six year mark (ie six years after we moved out - $734K) and that then became the base for any potential future capital gain. ie the capital gain between the valuation when we moved out and at the end of the six year period, was CGT free.

Is it as simple as I understand or are there implications of us not moving in or selling before the six year period is up?
Would appreciate someone's opinion or advice?
Cheers

For a scenario of going over the 6 years this is the formula:
(Market value at the date first rented out) x (non main residence days ? ie over 6 years)/ (days in deemed ownership period).
 
If you build/buy another PPOR and in later years sold a former PPOR that was turned into an IP, do all the same calculations apply as above. i.e is the CGT based on apportioning the time it was claimed as your PPOR/IP even though you may have since claimed another property as your new PPOR. I understand that as soon as you claimed a new PPOR the former will no longer be classified if still less than 6 years since turning it into an IP.

Thanks again,
 
I don't think it is that hard to establish a house as your main residence. When I moved into my place I connected all the services in my name, changed my licence, rego, electoral roll address, bank statements etc to my new address. I moved all my stuff into the house and lived there for a couple of years. Then I got moved for work and ended up renting out the house for a couple of years before selling. No problem.

I don't have my own place now but I want one. I want to build a house and move in to live there - same as before with the services and address changes etc. All my stuff will be moved and I will hopefully get to enjoy my new house for a couple of years. My question relates to a temporary absence. What does the ATO count as a genuine reason for a temporary absence? I know extended overseas holiday, moving for a temporary job transfer, study overseas or staying with a sick relative are given as examples. Do the ATO expect a genuine reason for moving out or can I temporarily move out for any reason? Note that I would need to rent out my house if I moved out to afford the repayments on the loan.
 
My question relates to a temporary absence. What does the ATO count as a genuine reason for a temporary absence? I know extended overseas holiday, moving for a temporary job transfer, study overseas or staying with a sick relative are given as examples. Do the ATO expect a genuine reason for moving out or can I temporarily move out for any reason? Note that I would need to rent out my house if I moved out to afford the repayments on the loan.

The legislation doesn't care about reasons.
 
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