Strategic Question

[b7277]

Hi all,

I am in a dilemma at the moment and need some suggestions.

We have a property in Sydney which we initially purchased as our home but without staying in the property even for a month we rented it out as we have to move overseas for work.

If we go back to Sydney, would it be better to rent a house and let the current rent pay for the morgage on the existing and negative gear or should we move in to this house.

If we move in to this house, would we be pay CG Tax if we sell this in the future.

Look forward to some advise on this.

Regards
b7277

 

[Terry_w]

Hi all,

I am in a dilemma at the moment and need some suggestions.

We have a property in Sydney which we initially purchased as our home but without staying in the property even for a month we rented it out as we have to move overseas for work.

If we go back to Sydney, would it be better to rent a house and let the current rent pay for the morgage on the existing and negative gear or should we move in to this house.

If we move in to this house, would we be pay CG Tax if we sell this in the future.

Look forward to some advise on this.

Regards
b7277

Since you did not live in it you couldn't claim the main residence absence CGT exemption.

Generally it would work out cheaper if you rented and claimed the deductions, but you have to think of the lifestyle side of the decision too and factor in future CGT.

 

[Colin Rice]

If we go back to Sydney, would it be better to rent a house and let the current rent pay for the mortgage on the existing and negative gear or should we move in to this house.

If we move in to this house, would we be pay CG Tax if we sell this in the future.
b7277

Hard to comment on the first question with out knowing your expected income upon your return as well as the rent you would be paying if you didn't move back in to the PPOR v the mortgage repayments you would pay if you occupied the PPOR.

Not an accountant but can speak from personal experience as I lived in a PPOR for three years and then was an IP for three then sold. Accountant worked it out on pro rata minus total holding costs (from memory).

Convert the PPOR to interest only with an offset account linked if you haven't already. May need to seek tax advice on this as well. Terry W http://somersoft.com/forums/member.php?u=26157 who posts on here is a chartered tax adviser so he could comment more accurately on your situation I dare say?

 

[Colin Rice]

We have a property in Sydney which we initially purchased as our home but without staying in the property even for a month we rented it out as we have to move overseas for work.
b7277

Beat me to it.

I believe from the post above they lived in it for just under a month?

 

[b7277]

We never lived in it even for a day. What meant to be our home ended up being an investment property. We put 20% towards that property.
Someone told us if we stayed in the property for 6+ years from the time we return we don't pay CGT. Is that true

 

[Rob G.]

We never lived in it even for a day. What meant to be our home ended up being an investment property. We put 20% towards that property.
Someone told us if we stayed in the property for 6+ years from the time we return we don't pay CGT. Is that true

Somebody is wrong ... use pro rata by days.

Rob

 

[Terry_w]

We never lived in it even for a day. What meant to be our home ended up being an investment property. We put 20% towards that property.
Someone told us if we stayed in the property for 6+ years from the time we return we don't pay CGT. Is that true

Ask them for the legislation to back this up!

Free advice is very costly!

 

[marg4000]

Someone told us if we stayed in the property for 6+ years from the time we return we don't pay CGT. Is that true

That person is confused. If you have a PPOR and have actually lived in it, then you can be away for up to 6 years, sell and not pay CGT, often referred to as "the six year rule". The reasoning behind it was that sometimes people have to move away for their job, but are not making a permanent move.

In your case you will always be up for some CGT.
Marg

 

[b7277]

as an example... current property is rented out for 650 p.w So if we choose to find a rented place to capitalize on the tax deductions should the rent be >650 or <650 or it doesnt matter.

How do we calculate the capital gain tax. Is there a percentage