Claiming Depn & 2.5% Cap Allwnce

[Ross]

Just want to confirm where you have rented out your PPOR and claiming the 6 year CGT exemption is there any issues with claiming depreciation on Fixtures/Fittings and Capital Allowance on the build cost ?
Normally, as I understand, these deductions would reduce your cost base for CGT when it comes time to sell but if CGT does not apply given the exemption is this just a perk.

Example numbers, per annum, for 6 years:
Rental income $40k
Deductions ($25k) (interest,rates,repairs etc but exc Depn and Cap Allw)
Depn ($5k)
Cap Allw ($10k)
Taxable Income $NIL

Then sell PPOR CGT free. Any issues with the above ?

Thanks,
Ross

 

[D.T.]

Nope, as long as other requirements met. Lived there 6 months, no other ppor's

 

[Paul@PFI]

The cost base adjustments still apply....However, if you satisfy the 6yr exemption and the property has been sold before the expiry of 6 years after ceasing to occupy then the CGT calculations are ignored altogether. (Exempt)

It a case of "wait and see"..The 6 yr exemption only really occurs at the point of the CGT sale. Seen plenty of clients who aim for it and miss the target. Plenty claim its 6yrs but when we do the maths its 6.5 years, 7 years etc. ..Or perhaps they lived in their partners house. Or bought another property they lived in for a while which is also now an IP....Many issues can taint the exemption.

Of course the 6 years can also be reset by moving back in....Then later moving out.

 

[Paul@PFI]

Nope, as long as other requirements met. Lived there 6 months, no other ppor's

The 6 month rule has NOTHING to do with CGT...That's a NSW Land Tax requirement which has a "mirror" 6 years absence rule (Clause 8 of the Revenue Ruling).

The CGT requirements aren't so precise. A week or two occupancy may be sufficient.