principle dwelling to investment property

Hi Everyone.
My name is Win from perth. I have been reading the forum for a while but this is very first post so forgive me if my words are not very appropriate. I ve got some issues to get advise from some experts in the forum. The story is as below.

I earn taxable $170000 pa.
My wife doesnt work.
I pay tax with family rates not individual rates.

I built a house (A), two years ago and still living in. That was $450000 with two name me and wife.Now it worths $600000.

I am building another house (B) with two name again, for $540000, and planing to live in and rent my existing house. Then (A) becomes investment and (B) becomes dwelling.

Issue (1)
If i sell house (A) after two years rent, lets say it worths $700000. What is capital gain tax payable amount ? Is it $250000 (700-450) or $100000 (700-600)? Dont worry about 50% discount at this stage.

If it is $100000, how does ATO accept it was 600 at the start of investment? Should I have revalued it and recorded at the start of investment?

What happen if i sell house (B) without paying any CGT as it is primary dwelling and, move back into house (A) and make it primary dwelling again, before I sell it? Do they go with prorata?

Issue (2)
Because family taxable income , only me work though, is $170000, If I earn profit from selling house (A), will I pay CGT on half of profit (as my wife's income zero+half of profit still under free tax bracket or pay a little if it exceeds) ? Or will I pay on whole profit as I always pay tax with family rate?

The same question in other way round, when i claim back tax deduction on my cost (interest, depriciation etc) anually in renting period two years, is it half or whole?

Can you do any recommendation after conclusion, where to live in and where to rent? I am pretty flexible.
Thanks in advance, if someone think i should ask a professional, please recommend me if you got anyone.
 
1. If you move out of a main residence and rent it, then the CGT will be based on the value when sold less the value when it is first rented out. Various items can be claimed and then the 50% CGT discount applied.

You may also avoid CGT by using s118-145 exemption, but the other property would be subject to CGT.

2. The owners of the proeprty are taxed based on their ownership percentage. So if wife owns 50% she will pay tax on this - or the capital gain amount will be added to her income.
 
Win I'd suggest getting some professional advice, you ha s a significant income and a wife who isn't earning any money, there could be smarter/ more flexible ways yo structure things
 
Back
Top