CGT implication If i rent straight away ? and future sale

Hi All,

I just purchased a house of my parents for 400k last year in September, I rented it out straight away.

So in eg 3 years time its worth 500k, increase of 100k I pay 50% CGT to gov and I get the other half etc ?

If let say I rent it out for 2 years, then decided to live in it for say 12months, then rent it out again. Would there be any tax benefit.

Ideally I should of lived in it etc then I know the 6 year rule CGT free. live and learn
 
If you sell the house in 3 years and the profit is $100k then you will pay the PAYG tax rate that applies to you, in the year of sale, on $50k which will end up being about $15750 assuming 31.5% PAYG rate. Not 50% of the gain.

$100,000 less 50% CGT consideration = $50,000 * Applicable tax rate

But you do get to reduce the cost base for the CGT Calculation by the amount of the stamp duty and any capital works.

If you rent it for 2 years, then live in for a year, the CGT calculation will be on 2/3 of the profit, however you should get a valuation at the time of making it your PPOR (an undervalued one) so that you can pay as little CGT as possible.

Go to the ATO website and download the CGT brochure & have a good read, there is a lot to it.

Cheers
 
Once you have lived in the property it could be classed as your main residence, so if you were to move out again and rent it you could use the absence from main residence 6 year rule (s 118-145 ITAA 1997) to avoid paying CGT - subject to a number of conditions.

However, a property can only be your main residence once you have lived in it. You would still be liable to CGT for any period before this,
 
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