CGT & PPOR

[dionysus888]

Is it correct that there is a 6 month period of overlap where you can control 2 PPOR's CGT free?
Assuming that is correct and you are building a new PPOR and it takes longer than 6 months, some CGT may be attributed to one of the residences at some point. What is an acceptable method of calulating the value of the property at the start of the CGT liable period?
If prior to building the new PPOR there was a house you rented and then demolished on the site, what adjustments if any do you make to the CGT calculation?
If you were to say the house and land it sits on is worth $200,000 and you rent it for a year and then demolish it to build your new PPOR and you have an estimate at that time that the vacant land is worth $200,000 when you decide to build the PPOR is there any CGT liability attached to the new PPOR when sold at some future date? What if the vacant land is worth less e.g. $180,000? Do you have a loss to carry forward?

 

[DaleGG]

Hi

Wow, you have been busy! Please bear with me as you have asked a number of complex questions with very complex issues.

>Is it correct that there is a 6 month period of overlap where you >can control 2 PPOR's CGT free?

Yes, it is true that there is a 6 month period of time where CGT will not apply to two houses under the PPOR rules unless the old PPOR was used to produce rental income at the time. Obviously then, the house was not "reeeeeealy" your PPOR at that moment.

>Assuming that is correct and you are building a new PPOR and it >takes longer than 6 months, some CGT may be attributed to >one of the residences at some point. What is an acceptable >method of calulating the value of the property at the start of the >CGT liable period?

Assuming the construction of the 2nd house for your PPOR takes longer than 6 months . . . I would use the 2nd house as your PPOR as you will maintain any CGT exemption into the future with this house. The old house is subject to CGT at some time in the future when you sell and not immeditaely.

With this in mind, you need a valuation as at the date that your old PPOR ceased to be your PPOR which is at the end of the 6 month overlap period. The eventual CGT will be based on the market value when the house is eventually sold in the future. Therefore, I would place a little pressure on the valuer to value the property at the upper extremity of its range to protect your position in the future.

>If prior to building the new PPOR there was a house you rented >and then demolished on the site, what adjustments if any do >you make to the CGT calculation?

Demolishing the house will trigger CGT in itself and you will be deemed to have received the market value of the house and be taxed accordingly on that figure.

You will also need to record the costs of constructing the new house for future reference.

>If you were to say the house and land it sits on is worth >$200,000 and you rent it for a year and then demolish it to build >your new PPOR and you have an estimate at that time that the >vacant land is worth $200,000 when you decide to build the >PPOR is there any CGT liability attached to the new PPOR when >sold at some future date? What if the vacant land is worth less >e.g. $180,000? Do you have a loss to carry forward?

I hope that I answered this above.

Have fun, I think I need another scotch and I lie down after these questions!!!!

Dale

 

[dionysus888]

Dale,

Many thanks for your replys. Sorry I am driving you to drink at such an early hour. Would that be a single malt or blend, highlands or islands that I am driving you to?

 

[DaleGG]

Originally posted by dionysus888
Dale,

Many thanks for your replys. Sorry I am driving you to drink at such an early hour. Would that be a single malt or blend, highlands or islands that I am driving you to?

No problems. I'm not that fussy and will drink just abt everything.

cheers

Dale