Hi SSers
I have a specific question that is hopefully easy to answer.
I have post-1996 PPR that I'm vacating to move to a new PPR. The old property will be rented out.
I would like to ensure that the CGT cost base is reset on the old property as per section 118.192 (reproduced below for reference). I have full PPR exemption up to now so that should not be an issue.
My question is that, do I have to do anything special if I want to ensure that my new property will be eligible for CGT cost base reset under the same rule, should I decide to rent it out in the future?
My concern is around what counts as 'income time', and how it relates to 'moving in time'.
Say:
1. I start advertising rental for property 1 on 10 Jan.
2. I vacate property 1 and move to property 2 on 15 Jan.
3. I find a tenant on 20 Jan.
When is 'income time?' Is it 15 Jan? Am I voiding the cost base reset because the rule says 'covered by PPR exemption up to income time' and in this case it is not covered between 15-20 Jan?
I can probably nominate property 1 to be my PPR up to 20 Jan, but wouldn't that then render property 2 uneligible for this cost base reset in the future, because between 15-20 Jan it is not my PPR? (The rule seems to require that you are fully covered by PPR up until income time).
Or - and this is my hope - I can nominate 'income time' to be 15 Jan, since it is when the property is available for rental?
Bonus complication: What if I want to do some reno to make the property fit for rental?
INCOME TAX ASSESSMENT ACT 1997 - SECT 118.192
Special rule for first use to produce income
(1) There is a special rule if:
(a) you would get only a partial exemption under this Subdivision for a * CGT event happening in relation to a * dwelling or your * ownership interest in it because the dwelling was used for the * purpose of producing assessable income during your * ownership period; and
(aa) that use occurred for the first time after 7.30 pm, by legal time in the Australian Capital Territory, on 20 August 1996; and
(b) you would have got a full exemption under this Subdivision if the CGT event had happened just before the first time (the income time ) it was used for that purpose during your ownership period.
(2) You are taken to have * acquired the * dwelling or your * ownership interest at the income time for its * market value at that time.
(3) If your * ownership interest in the * dwelling * passed to you as a beneficiary in a deceased estate, or you owned it as the trustee of a deceased estate and the * CGT event did not happen within 2 years of the deceased's death, you apply this Subdivision as if:
(a) you had * acquired the interest as an individual and not as a beneficiary or trustee of a deceased estate; and
(b) for applying the formula in section 118-185, your non-main residence days were the number of days in your * ownership period when the dwelling was not the main residence of an individual referred to in item 2, column 3 of the table in section 118-195.
I have a specific question that is hopefully easy to answer.
I have post-1996 PPR that I'm vacating to move to a new PPR. The old property will be rented out.
I would like to ensure that the CGT cost base is reset on the old property as per section 118.192 (reproduced below for reference). I have full PPR exemption up to now so that should not be an issue.
My question is that, do I have to do anything special if I want to ensure that my new property will be eligible for CGT cost base reset under the same rule, should I decide to rent it out in the future?
My concern is around what counts as 'income time', and how it relates to 'moving in time'.
Say:
1. I start advertising rental for property 1 on 10 Jan.
2. I vacate property 1 and move to property 2 on 15 Jan.
3. I find a tenant on 20 Jan.
When is 'income time?' Is it 15 Jan? Am I voiding the cost base reset because the rule says 'covered by PPR exemption up to income time' and in this case it is not covered between 15-20 Jan?
I can probably nominate property 1 to be my PPR up to 20 Jan, but wouldn't that then render property 2 uneligible for this cost base reset in the future, because between 15-20 Jan it is not my PPR? (The rule seems to require that you are fully covered by PPR up until income time).
Or - and this is my hope - I can nominate 'income time' to be 15 Jan, since it is when the property is available for rental?
Bonus complication: What if I want to do some reno to make the property fit for rental?
INCOME TAX ASSESSMENT ACT 1997 - SECT 118.192
Special rule for first use to produce income
(1) There is a special rule if:
(a) you would get only a partial exemption under this Subdivision for a * CGT event happening in relation to a * dwelling or your * ownership interest in it because the dwelling was used for the * purpose of producing assessable income during your * ownership period; and
(aa) that use occurred for the first time after 7.30 pm, by legal time in the Australian Capital Territory, on 20 August 1996; and
(b) you would have got a full exemption under this Subdivision if the CGT event had happened just before the first time (the income time ) it was used for that purpose during your ownership period.
(2) You are taken to have * acquired the * dwelling or your * ownership interest at the income time for its * market value at that time.
(3) If your * ownership interest in the * dwelling * passed to you as a beneficiary in a deceased estate, or you owned it as the trustee of a deceased estate and the * CGT event did not happen within 2 years of the deceased's death, you apply this Subdivision as if:
(a) you had * acquired the interest as an individual and not as a beneficiary or trustee of a deceased estate; and
(b) for applying the formula in section 118-185, your non-main residence days were the number of days in your * ownership period when the dwelling was not the main residence of an individual referred to in item 2, column 3 of the table in section 118-195.