CGT Question Please

[littletee]

Hi Guys,

Quick question, I currently live in our PPOR and we're in the process of getting plans for a Unit out the back of our current PPOR.

If we go ahead and build a Unit out the back, sell the front Unit which is our current PPOR, I am right in assuming we won't have to pay any CGT on the front Unit as its our PPOR currently?

Adding to then, when we move into the back Unit once its complete we're moving into that and that will becoming our PPOR, when we go to sell that I also assume that we wont be subject to CGT because that is our current PPOR.......Having I got something wrong or am I right?

 

[wylie]

What you have outlined is my assumption also, but hopefully someone else can confirm.

 

[Mry]

If we go ahead and build a Unit out the back, sell the front Unit which is our current PPOR, I am right in assuming we won't have to pay any CGT on the front Unit as its our PPOR currently?

Correct.

Adding to then, when we move into the back Unit once its complete we're moving into that and that will becoming our PPOR, when we go to sell that I also assume that we wont be subject to CGT because that is our current PPOR.......Having I got something wrong or am I right?

Nope.

There are always misunderstandings with the PPOR exemption. It can only be on one property at one time and when it is not, the property is exposed to capital gains tax.

One of the nasty things that occurs when you split property on a PPOR is that the split off land is treated as having no exemption available at all. It is as if it was never a PPOR. So what will happen is that you will move in there, start claiming it as a PPOR and then sell it, but you will be liable for capital gains tax from when it was purchased up to the date that you moved in.