Confirming CGT calc

[Ross]

Looking at selling one of our IP's, rough numbers and dates as follows:

-Buy unit Nov 03, cost $450k and live in for 12 months

-Move out and rent for approx 2 years until Oct 06. Not claiming PPOR elsewhere during this period.

- Move back in Oct 06, do $25k reno and live in for 18 months until April 08.

- Move out April 08, get valuation for $480k and rent out until Oct 12. Claim PPOR elsewhere during this time.

- Sell Oct 12 for $590k

QUESTION: Is this CGT just on the increase in value from April 08 ($590k - $480k = $110k and then take 50% of this ?

Ross

 

[dan c]

I don't think so, Ross.

The valuation needs to be done at the time the property is first used to produce income, which would be Nov 04.

But you would only pay CGT on the portion from Nov 08 to sale date, as you would be eligible for the 6 year exemption for the first rental period.

CG would be (sale proceeds - Nov 04 valuation) x (days [Nov 08 to Oct12] / days[Nov04 to Oct12])

http://www.ato.gov.au/individuals/content.aspx?doc=/content/36910.htm&page=3

See the last example.

 

[Ross]

Much appreciated Dan