is this a legit way to reduce cgt
- Thread starter TMNT
- Start date
A person can only have 1 PPOR. Husband and wife living together share the same PPOR. A husband and wife not living together can have separate PPOR obviously.
Why not just buy renovate and sell. From memory, you only need to hold your PPOR for 6 months to make it exempt from CGT (correct me if I'm wrong). Blocks of land its 4 years.
Why not just buy renovate and sell. From memory, you only need to hold your PPOR for 6 months to make it exempt from CGT (correct me if I'm wrong). Blocks of land its 4 years.
im not 100% sure on the laws however I have a single friend in his 50s, what he does is buys blue chips, lives in it for 6-12 months and basically rennovates it full time, and then sells it, all CGT free
what about a married couple, where the man leaves the home physically and lives in the house for hte entire time, surely there is no law that states that a married couple have to live together?
obviously if it was 6 months for a PPOR, then a 6 month reno would be perfect
If the couple is seperated (ie pre divorce) then they can have 2 PPORs otherwise they can only have one.
Back in about 2003 there was a couple in Sydney capitalizing on the boom doing this. They bragged about it on A Current Affair. Then the ATO came knocking...
The PPOR CGT exemption is like the first home owners grant. Once per individual or couple.
oh wow, I didnt know that! obviously a couple having 3 PPORs is simply unrealistic and illogical, but I would have thoght in this day and age, 2 PPORs was unusual but not shocking
ouchy....would not like to have been there when they got the bill from ATO
You can have multiple PPORs and flit between them, however, you will only get the CGT exemption on one of them.
Having a holiday house is an example where you may own two PPORs but you will be up for CGT and Land tax on one of them.
whats the benefit of having a second PPOR if you dont get any CGT tax breaks?
The only people I know of with two PPORs are celebrity type couples, perhaps because it is commented on in the magazines and newspapers. The vitamin king and his wife lived next door to each other from memory.
I think Helena Bonham Carter and Tim Burton live in adjoining houses (if my memory is correct).
Clearly, rich people probably don't need the tax breaks?
It's unlikely the homes are owned in their own names. They have access to much better tax breaks, I would imagine.
I agree. I understand it is separate homes for personal reasons. I've not heard of anyone else doing this.
There is no minimum time to establish a PPoR. It is about intention.
I moved into a PPoR the day after settlement and intended to live there long term. Logically, I:
-moved my stuff into the house
-had the rates put into my name at that address
-established electricity, water and gas accounts
-connected the phone and established an account in my name
-updated the electoral roll to that address
-updated my drivers licence to that address
-joined the local library with that address
I think that's it. Anyway, work moved me to another location so I rented out my property and sold it just under 5 years later CGT free. It is not relevant to the ATO how long I lived there with the house as my PPoR because my intention was to occupy as my PPoR and I moved in a soon as practicable after purchase. Here is what the ATO says:
http://www.ato.gov.au/General/Capit...-estate/Is-the-dwelling-your-main-residence-/
Living in a house to renovate and sell for profit might not pass the last test. Or, it could work the first time, and even the second but do it over and over and the ATO might investigate.
I moved into a PPoR the day after settlement and intended to live there long term. Logically, I:
-moved my stuff into the house
-had the rates put into my name at that address
-established electricity, water and gas accounts
-connected the phone and established an account in my name
-updated the electoral roll to that address
-updated my drivers licence to that address
-joined the local library with that address
I think that's it. Anyway, work moved me to another location so I rented out my property and sold it just under 5 years later CGT free. It is not relevant to the ATO how long I lived there with the house as my PPoR because my intention was to occupy as my PPoR and I moved in a soon as practicable after purchase. Here is what the ATO says:
http://www.ato.gov.au/General/Capit...-estate/Is-the-dwelling-your-main-residence-/
Living in a house to renovate and sell for profit might not pass the last test. Or, it could work the first time, and even the second but do it over and over and the ATO might investigate.
That said, spouses can have different main residences.
http://www.ato.gov.au/General/Capit...-or-children-live-in-a-different-home-to-you/
http://www.ato.gov.au/General/Capit...-or-children-live-in-a-different-home-to-you/
For the law see s118-170ITAA97
http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s118.170.html
http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s118.170.html
I know someone who has a suburban home. And a beach house. Lives in both.
The beach house is PPOR....
- It has highest land value and hence land tax issue
- It has best CGT potential makes sense to zero rate it.
This is an acceptable tax reduction startegy. BOTH remain personal use assets. No income, no deductions just wealth tax savings.
Some are fortunate and do have multiple homes. ie the week home and the weekender. Only ONE can be a PPOR and it can be a choice.
"except a spouse living permanently separately and apart from you"
I wonder what that means?
This issue can also bite you on the ars3. Its often discussed but not commented on publically as it seems really an issue that harms same sex couples more than other groups. They each own a property but live in one persons home. Everyone likes to think that "their one home" is tax free. Well one is and the other isnt right ?? Wrong. One may have a 50% CGT exemption and the other none.
Any other CGT comments on this issue ?
A bit ambiguous isn't it. Doesn't necessarily mean a marital breakdown.
