I’m in a bit of a dilemma. I own a unit which I have lived in the past 2 years, so it’s my PPOR. I also rent half of my unit to someone else. I was advised a little while ago that I should claim deductions (interest, depreciation, expenses, etc) for the half that was rented as I still wouldn’t pay CGT as it was my PPOR. I now understand that this is wrong as I claim interest as a deduction. Late last year I adjusted my previous 2 year tax returns to include the income/deductions for the unit.
Q1. What can I do to avoid paying CGT for these two years? The tax benefits I received now pale compared to the CGT I pay when I sell ($5k return now, but capital gain is $100k which is $25k tax at the highest rate including 50% reduction for holding it more than 12 months). Can I tell the ATO I made a mistake and reverse everything? I doubt it.
Q2. Do you pay CGT only if you claim interest? If so can I just reverse that? Does it matter that I did pay interest on that portion and didn’t claim it? (see ITAA97 3.1-118-B http://law.ato.gov.au/atolaw/view.htm?basic=+main residence +interest&&docid=PAC/19970038/118-190)
Q3.Assuming I can avoid paying CGT for these years, I have now moved out into another place I bought (thanks to help from Rolf). I assume I need a valuation of the unit I have just started renting out for CGT in the future. Do I need to pay for a proper valuation, or (I read somewhere on this forum) can I get a bunch of 3 or more valuations from real estate agents?
I’m in a bit of a pickle aren’t I?
Nathan
Q1. What can I do to avoid paying CGT for these two years? The tax benefits I received now pale compared to the CGT I pay when I sell ($5k return now, but capital gain is $100k which is $25k tax at the highest rate including 50% reduction for holding it more than 12 months). Can I tell the ATO I made a mistake and reverse everything? I doubt it.
Q2. Do you pay CGT only if you claim interest? If so can I just reverse that? Does it matter that I did pay interest on that portion and didn’t claim it? (see ITAA97 3.1-118-B http://law.ato.gov.au/atolaw/view.htm?basic=+main residence +interest&&docid=PAC/19970038/118-190)
Q3.Assuming I can avoid paying CGT for these years, I have now moved out into another place I bought (thanks to help from Rolf). I assume I need a valuation of the unit I have just started renting out for CGT in the future. Do I need to pay for a proper valuation, or (I read somewhere on this forum) can I get a bunch of 3 or more valuations from real estate agents?
I’m in a bit of a pickle aren’t I?
Nathan
