CGT Implications

[Craig-G]

Hi guys,

I was speaking to a friend who is chasing some assistance on the potential Capital Gains Tax implications on their soon to be IP. He recently purchased a PPOR with his partner and they will soon be moving in and maintaining his partners house to an IP. They would like to know whether they will be hit for CGT if they sell in the future or whether they will qualify for the 6 year exemption.

His partner's occupancy history in her house is as follows:

Purchased and moved in 2001
Moved out in 2004 for 2 years in the UK
Moved back in 2006 when she returned to Aus
Moved out in November 2007 to rent

Any help on this issue would be appreciated it is a bit above my understanding to provide advise.

Cheers,

Craig

 

[Craig-G]

Sorry guys,

Hope this isn't being too cheecky but just bumping this up to the top of the pile to see if I can get a bit more of a bite - all responses most appreciated.

Cheers - Craig

 

[Ausprop]

i was going to reply but its a bit tricky because we dont know their legal status. if they are together then they can only have one PPOR then no they couldnt use the 6 year rule and there could be a question mark over whether they are already racking up a CGT bill on one residence.

this question would be better under tax and accounting

 

[BayView]

If the partner's house is being used an an IP, then he/she has to nominate somewhere else as her PPoR (the boyfriend's house).

The partner can sell the IP anytime within 6 years without being liable for CGT.

After the 6 year rule expires, the property will be liable for CGT if they decide to sell it.

The partner has until Nov, 2013 based on the last move-out date.

If they move back in anytime in that 6 years, the clock re-sets.

 

[Ausprop]

LA I think you missed the bit that they already have a PPOR exemption running... they definitely can't claim 2 just because they are 2 people

 

[HiredGoon]

They would like to know whether they will be hit for CGT if they sell in the future

Almost certainly not.

Might be able to use it to offset some other capital gains, though.

 

[BayView]

LA I think you missed the bit that they already have a PPOR exemption running... they definitely can't claim 2 just because they are 2 people

Quite right. I did miss that bit.

Sorry folks; no double-dipping.

 

[u3228133]

But she should still be able to claim the Main residence exemption for the period she was in the UK, and for the period from Nov 07 to when she moves into her new PPOR...

 

[Ausprop]

well it would depend on the status of the relationship