By: winsonlee118
17/12/2008
9:03 am Yahoo! Profile:
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"Long enough" seems to be quite subjective as different people may define it differently. Did ATO provide a guidance on how long will the "long enough" be ?
I wouldnt want to come to a point of time where I define my long enough as 6 months but when i sell my property ATO actually comes to me telling me that I have to pay for my CGT.
What about i am in a situation where i own my primary residence for 12 years and within the first six years i stays in there for 1 year and the next six years i stays in there for 2 years ? What will the implication be towards my CGT ? |
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By: ecchi.gaijin
16/12/2008
3:06 pm Yahoo! Profile:
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If you do not move back into the house within 6 years, you lose the entire exemption for the period you moved out.
Also, the initial period is not a defined time frame. You need to live in the house long enough to establish that it is your principle residence. 6 months is used by some as an indicator only.
The example of how the exemption works is;
You buy a house today and live in it. 6 months later you decide to move to another location because of a new job. During a 3 year period of owrking this new job you rent a place to live in and rent out your old residence. At the end of the 3 years you move back to your original residence.
This is an example of the exemption working.
If you do not move back in before the 6 years expire you have to pay CGT on the entire period that you rented out your house. |
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By: winsonlee118
16/12/2008
2:05 pm Yahoo! Profile:
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Just to clarify things further.
If i stays in the residence for 6 months and then only rent it out after 6 months for 6 years, do i fulfill the condition of the CGT tax exempt ?
Eg I buy a property on december 2008 for $400,000. Move out from the property in june 2009. Rent the house out since July 2009 till july 2015. August 2015 I sold it for $550,000.
Since the 6 years exemption is from July 2009 to July 2013 and the value of the property as on July 2013 is $500,000.
Does that mean that the CGT is calculated according to $550,000 - $500,000 = $50,000. Since I own the property more then 12 months I am entitled for the 50% CGT discount ? So the tax will only be applicable to $25,000 ? |
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By: ecchi.gaijin
16/12/2008
1:10 pm Yahoo! Profile:
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"If you remain in the house you lose part of your exemption because "
Should read
If you remain in the house while also renting 2 rooms out ..... |
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By: ecchi.gaijin
16/12/2008
1:09 pm Yahoo! Profile:
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primary residence exemption is an exemption from CGT for the one house that you reside in. If you move out of that house, you can maintain that same house as your primary residence for up to 6 years. BUT you can only have one principle residence at any one time (excludes special circumstances such as building a new house etc)
If you remain in the house you lose part of your exemption because there is a duel purpose (ie residence AND income)
You can do it, but you will lose part of your exemption status. |
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By: winsonlee118
16/12/2008
12:59 pm Yahoo! Profile:
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I was reading an article mentioning about.
1) The house in question must be your main dwelling to be exempt from CGT. In other words, you cannot own another property and live in that for a few years, then move back and forth between that and your main residence and avoid CGT on both properties.
2) Generally, if you bought a house after August 20, 1996, you must have lived in it when you first bought it (as opposed to having rented it out) to be entitled to a full exemption. This comes under the “Home first-used to produce income” rule.
3) On the proviso the above two points are met, if you rent out your home for less than six years, you are exempt from CGT.
QUESTION
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1) I was reading somewhere mentioning that if I stay in my primary residence for 6 months and rent it out for less then 6 years I am eligible for the CGT exempt. Is that true ? When point 2 mention bout me living in there to be entitled for the exemption, does that mean that I am not allow to sublet my residence for 6 months while I am staying there ? |
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By: ecchi.gaijin
16/12/2008
11:58 am Yahoo! Profile:
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1) Not sure if this will effect your eligibility
2) Yes you can
3) Because you are using your residence for income producing activities you will lose part of your primary residence exemption to CGT. |
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By: winsonlee118
16/12/2008
11:39 am Yahoo! Profile:
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I am considering to buy a three bedroom house which will be my primary residence.
1) If I would like to sublet two other bedroom, after my purchases, am i still eligible for the First Home Owner Grant ?
2) Am I allow to use negative gearing in such situation ?
3) what is the implication of CGT if I plan to sell my property 8 years later ? |
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