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From: Mike .


Reducing Capital Gain Liability - more info
From: Michael
Date: 11 Dec 2000
Time: 01:48:50

Peoples,

I'm about to sell an IP (neg geared) to buy positively geared properties. But before I do I'm trying to work out how I could reduce my CGT liability.

I've never had a principal place of residence (always rented) so I'm wondering how I can define this property as such.

Here's the extract from the ATO's "Guide to Capital Gains Tax 1999-2000"...

"Is the dwelling your main residence?

Factors that may be relevant in determining whether a dwelling is your main residence include:

- the length of time you lived there - the capital gains tax legislation does not specify a minimum time that a person has to live in a home before it is considered to be their main residence; what is important is that it is your main residence - where your family lives - whether you have moved your personal belongings into the home - the address to which your mail is delivered - your address on the electoral roll - connection of services - for example, telephone, gas or electricity - your intention in occupying the dwelling

A mere intention to construct a dwelling, or to occupy a dwelling as your main residence, without actually doing so, is not sufficient to obtain the exemption. In certain circumstances you may elect to treat a dwelling as your main residence even though you have ceased to occupy it."

So guys... any ideas? (by the way, the property was purchased 3yrs ago)

Michael

 

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Kathryn M

Reply: 1
From: Mike .


Re: Reducing Capital Gain Liability - more info
From: KathrynM
Date: 17 Dec 2000
Time: 01:05:16

Obviously it is worth seeing an accountant. My understanding of CGT is that it would be possible to avoid CGT on a property by "moving in" immediately after purchase, and v.soon after "moving out". As once main residence status was established, you can continue to claim "main residence status" for a total of 6 income producing years.

(However, I suspect this would be cancelled by claiming a tax deduction on the interest??? so it doesn't help in your case)

 

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NIF

Reply: 1.1
From: Mike .


Re: Reducing Capital Gain Liability - more info
From: NIF
Date: 11 Dec 2000
Time: 11:27:20

As far as I know there's no legal way to do it.

If there was no-one in there for a while before you started renting it to a tenant, you could have proved you lived there by getting electoral roll, phone etc in your name for a short time.

But 3 years later you are not going to be able to get much proof that you 'lived' there, so I think you'd be in trouble if you were audited.