CGT implications for PPOR also used as home office

[mgs4]

If you have a home office at your PPOR whereby you have relevant tax deductions including interest payments would this trigger CGT on the PPOR? Is there anyway you can claim the deductions and still maintain the CGT free status for a PPOR?

 

[alexlee]

If you have a home office at your PPOR whereby you have relevant tax deductions including interest payments would this trigger CGT on the PPOR?

Yes.

Is there anyway you can claim the deductions and still maintain the CGT free status for a PPOR?

No.

 

[Lawry]

my understanding is CGT will be calculated on the % of your home you use for business, e.g. 10%

 

[Terry_w]

You may be able to rent your main residence out and rent elsewhere yourself. This way you could claim the absence from main residence CGT exemption and claim part of the rent as a deduction.

But, you could only claim a home office in some circumstances
see
TR 93/30
Income tax: deductions for home office expenses

and
http://www.ato.gov.au/Business/Deductions-for-business/Home-office-expenses/

 

[mgs4]

my understanding is CGT will be calculated on the % of your home you use for business, e.g. 10%

I wonder how this would work if you say claimed 30% for 3 years, then moved used a different office (ie didn't claim anything) and then sold the house 7 years later, would you have to pay 30% CGT even thought you didn't claim the interest deduction for most of the life of the PPOR?

 

[ozmale42]

I wonder how this would work if you say claimed 30% for 3 years, then moved used a different office (ie didn't claim anything) and then sold the house 7 years later, would you have to pay 30% CGT even thought you didn't claim the interest deduction for most of the life of the PPOR?

I think how this is dealt with is that you're assessed on the proportion of the capital gain in relaton to the floor space set aside in running the business

So if the capital gain on your PPOR was $50k and the area set aside for your business was 30% , then the capital gain is $15,000 (assuming the second office is also 30% of teh floor space) . I don't think it matters if you declare nothing as I think its based on what you "could have declared" had you borrowed.

 

[Lawry]

I wonder how this would work if you say claimed 30% for 3 years, then moved used a different office (ie didn't claim anything) and then sold the house 7 years later, would you have to pay 30% CGT even thought you didn't claim the interest deduction for most of the life of the PPOR?

in addition to what ozmale42 said, the CGT would likely be calculated on 30% of the gain in PPOR value during the 3 years... but proving all that gets a bit murky , e.g. how to calculate the value at the end of the 3 yr period if you don't sell for several years later, how to prove you stopped using your PPOR as an office...