Cgt On A Holiday Home

Hi there!
I Like the new style.

A Post the other day got me thinking.

Can I call my Holiday home my P.P.O.R so as to avoid C.G.T on it when I sell.
The reason being it has had huge capital growth but I dont intend keeping it forever. (Its been rented for 5.99 years)

I intend to keep forever (or at least until retirement) my original P.P.O.R by converting it into a rental, but not for another 2-3 years.
 
Hiya

Yes, you can elect to treat your holiday house as your PPOR. However, in doing so, this means that you cannot claim your home as a PPOR for the same time frame. Furthermore, the holiday house needs to be either moved into again as your PPOR, or sold within that 6 year time frame to avoid CGT.

Good luck
Dale
 
If I was to be the sole owner of our ppor and my wife was to be the sole owner of another property e.g. holiday house what prevents us from each claiming a ppor? Does the ATO have a way of cross-referencing this?
 
I think I read it in ATO's brochure on CGT. If houseband and wife claim different PPOR then each is entitled to 50% exception from CGT.

life was not supposed to be fun...

Say cheese :p

Lotana
 
Lotana,

I know what is supposed to happen but I am wondering if there are ways that when timed correctly may prove more beneficial and how does the ATO know. If each person for all their paperwork i.e. Bills, rates, electoral roll etc., uses the address of the residence in their name, when they sell they say they were living apart and that the respective residence was their ppor. These are just random thoughts passing through the space some call a brain. I don't have a problem with the concept of paying tax but when one sees the wastage of our tax dollars, sometimes ones mind wanders to thoughts of how not to pay so much tax.
 
Hi

If each spouse owned one property each in full (that is not joint ownership) then I can see no logical reason why each cannot claim the property as their PPOR and so exempt from CGT.

However, on re-reading the relevant sections of the tax act (after prompts from Ruchard Hunt - thank you Richard!!) it is clear that the tax law does not allow you to each claim each house as exempt from CGT under the PPOR rules.

If the properties are joint ownership then you cannot achieve this same result.

To the best of my knowledge, the tax office do not have ways of matching ownership & CGT yet . . . but, they have been known to match sales information from state governments with tax returns.

Be careful of knowingly lodging an incorrect tax return.

Dale
 
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Many thanks for the reply Dale.
So if my wife was to sell the holiday house that she fully owns as her PPOR for CGT purposes and some time down the track I was to sell our house as my PPOR for CGT purposes at what point do we come unstuck with the ATO? If we weren't married, could we both have a PPOR as a defacto couple? Are there tax advantages to being divorced?
 
Originally posted by dionysus888
Many thanks for the reply Dale.
So if my wife was to sell the holiday house that she fully owns as her PPOR for CGT purposes and some time down the track I was to sell our house as my PPOR for CGT purposes at what point do we come unstuck with the ATO? If we weren't married, could we both have a PPOR as a defacto couple? Are there tax advantages to being divorced?

Hiya

Our tax system is based on self assessment. This means that whatever you show in your tax return will be accepted at face value. It is only if the tax office asks questions that you must prove what you have done and why . . .

Yes, if you were not married, you could each claim a house as your PPOR and no, there are no real tax advatanges to be divorced.

Cheers

Dale
 
Thanks for all the replys. Especially Dales.

Selling the Holiday home within 6 years is not an option.

However- I've still got a question to ask.
If I'm living in both properties, with all the bills from both properties in my name, e.g. electricity and phone, and I'm spending almost as much time at the holiday home as I am at the real home, and my wife is spending even more time at the holiday home than me due to being unemployed (lucky B.....) whats to stop me calling the holiday home the main P.P.O.R. How will the A.T.O. see it?
Is it simply a matter of counting the days spent there?
 
Hi

Nothing at all! It is up to you to elect which house is your PPOR. For most of us peasants, this is easy as we generally only have the one house, but for land barons like you :D it is a tougher position to be in.

Seriously, I would urge you to stay with the one house as exempt from CGT and not try to be too smart. It's just not worth the trouble in the end.

Have fun

Dale
 
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