Do I pay Capital Gains

[SkyIsTheLimit]

I know this is a simple question to ask my accountant, but I havent heard anything back from him and I cant wait any longer to find out from him.

Do we still ahve to pay Capital Gains for the sale of our home based on our scenario below??

We bought our home in Oct 2006, lived in it up until late Sep 2010. We rented it out for the past year. Now we want to sell it. Its vacant at the moment and has been for the past 3 weeks.

I hope someone can answer this for me!!

 

[Propertunity]

No CGT to pay.
You have 6 years to sell a PPOR after you move out and still not pay CGT.

 

[SkyIsTheLimit]

I love you!

 

[Propertunity]

We can talk later....you're a girl right?

 

[SkyIsTheLimit]

lol, Yes I am

 

[Belu]

Actually it depends what you have been doing in the mean time. Have you been renting or living in another property you own?

If you havent claimed PPOR status on another property then you should be fine (and have 6 years as above), but if you have then you will need to pay some CGT.

 

[SkyIsTheLimit]

Oh darn it! yeah, we bought another property, and I am pretty sure we made that out PPOR
How is it calculated if its partial, or is that delving into a world of confusion for me?

 

[Propertunity]

Yeah, I should have added "if you have not purchased another PPOR in the meantime".

However, a few things:
1. There is a 6 month overlap rule where you can have 2 x PPORs
2. You actually have to have made a CG to pay CGT - did you?
3. You'll get a 50% discount as you've held the asset for over 12 months
4. If you hold it 50/50 with your partner, then you're only up for CGT on 50% of the calculated CG each - and then you each only pay at your individual marginal tax rates
5. If you sell it now, you won't have to pay CGT until way after June 30 next year when your accountant does your returns

Sounds like you need to wait for that call from your accountant.

 

[Kristine..]

And the tax is levied on the nett Capital Gain Tax for the relevant period when the property was not your Principal Place of Residence

So if Propertunity is right, and there is a 6 month transition period, then all of the assessments will only be made / adjusted on the deemed market value of the property from April to now - and most markets in Australia have 'gone backwards' in that time so no gain, no pain!

It would seem that the simple answer is still 'no'

Cheers
Kristine

 

[Propertunity]

...So if Propertunity is right, and there is a 6 month transition period, then all of the assessments will only be made / adjusted on the deemed market value of the property from April to now - and most markets in Australia have 'gone backwards' in that time so no gain, no pain!

Actually the 6 month overlap rule only comes into play where your 1st PPOR is up for sale and you have purchased another PPOR.......so it may not apply in this instance

It would seem that the simple answer is still 'no'

Even so, as you say, in Qld if the market has retreated, then no CG = no CGT.

 

[SkyIsTheLimit]

Well you all may have a very valid point here....It was valued at $360,00 late last year. We'd be lucky to have it valued at that same price now

So my understanding is that capital gains is calculate from when the property became an investment. So even if there is a slight increase in the value, we'd be paying a much smaller amount.

lurve this forum....me thinks I need a new accountant!

 

[wylie]

So, now we have sorted that out, the next most important question is "will SkyIsTheLimit and Propertunity still need to get a room?"

 

[Propertunity]

Now wylie, I am a bit concerned about you lately. Especially in view of the Scott McGillivray thread you've got running at present.


....and i did say TALK later to the OP.

 

[lolipss]

Usually when you convert IP to PPOR, and you want to get a valuation done before you moved in for the cgt purposes in the future, do you get a property agent to do the valuation or you need to hire someone special for it?