Do I need a property evaluation ?

[QuickZebra]

I turned my PPOR to IP since Oct 2009. I call it property A

I bought a investment property B in Dec 2009 and moved in Aug 2010. I didn't do property evaluation before I moved in.

For capital gain tax purpose, do I need to organize a property evaluation for property B now and why ?

Any suggestion would be highly appreciated.

 

[Terryw]

You are moving into an investment property

http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s118.185.html

 

[BV]

For capital gain tax purpose, do I need to organize a property evaluation for property B now and why ?

I would.
A property valuation is a must IMO.
Otherwise how would you prove to the ATO what its value was at the time it stopped being a rental.
The ATO could say that at the time the property was worth $100K more and it will be up to you to prove otherwise

 

[Terryw]

No, it is based on the proportion of time it was lived in v rented. see s118.185 no valuation needed.

Still wouldn't hurt in getting one.

 

[BV]

No, it is based on the proportion of time it was lived in v rented. see s118.195 no valuation needed.

Still wouldn't hurt in getting one.

Thanks Terry.
Is it still based on time if you have proof that there was no CG during the rental period?
This is where the valuation comes handy IMO

 

[Terryw]

hi Bill

If going from IP to main residence then you would need a valuation.

But, if you are moving into an investment, then s118.185 only allows the time method:

CG = GL x (no main residence days)/(days in ownership period)

 

[Rob G.]

I turned my PPOR to IP since Oct 2009. I call it property A

I bought a investment property B in Dec 2009 and moved in Aug 2010. I didn't do property evaluation before I moved in.

For capital gain tax purpose, do I need to organize a property evaluation for property B now and why ?

Any suggestion would be highly appreciated.

If property A was your fully exempt PPOR prior to Oct 2009 when it changed into an IP then its cost base is the market value.

Property A needs the valuation.

Property B will be apportioned by time.

Cheers,

Rob

 

[RightValue]

You need a retrospective valuation done on property A with the valuation date as at the Day it became an IP.

The sooner you get it done the cheaper and easier it will be.

The valuer will need to inspect and measure the property. They will give you a couple of copies of the report which you will file away until you need it, when you do need it you can provide an original copy to the ATO.

Make sure the valuation is done by a Certified Practising Valuer (CPV) who is an Associate (of Fellow) of the Australian Property Institute (AAPI). It should be accepted by the ATO without question if needed as proof of value of the property the day it became an IP.

Since you are in Melbourne, If you need any help in this regard just PM me.

cheers

RightValue

 

[QuickZebra]

Really appreciate your help

Many thanks to RightValue,Rob G,Terryw,BV for your detailed information.
I've done evaluation for property A before I turned it into IP in Oct 2009.

Based on the information you provided, my understanding is

Property B will be apportioned by time.
I don't need a evaluation for Property B.

Thanks for your quick responding. I learnt a lot from this forum !