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Question re. Capital Gains Tax


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9 replies to this topic

#1 tobemommy

Posted 06 October 2019 - 08:01 PM


Hey mums


We are in a bit of dilemma - hoping someone on here can help !


We bought a land in Apr 2018 and built a house to live in it.


We are going to get a handover from the builder by end of Oct '19 but our circumstances have changed and we do not want to live there anymore.


I am now concerned that if we sell the property straight away we would be hit by CGT (guessing it would be 50% discounted as we have the land for more than 12months). Although I do not believe there is much of capital gain (if any) to be realised.



If we move in straight away after the handover and live there for 3 months this will give us some time to decide if we should sell or rent the property out. Also, would we be able to avoid CGT completely if we sell the property after 3 months?


Appreciate your help !


#2 PrincessPeach

Posted 06 October 2019 - 08:16 PM

Do you own another property?

#3 tobemommy

Posted 06 October 2019 - 08:26 PM

View PostPrincessPeach, on 06 October 2019 - 08:16 PM, said:

Do you own another property?

Yes, we do own a small apartment that we bought in May 2018 and lived there for 6 months before renting it out.

And currently we are renting.

#4 PrincessPeach

Posted 06 October 2019 - 08:46 PM

You can only have one place as your principal place of residence at a time - so theoretically if you choose for this new house to be your principal place of residence, then you can sell it cgt free. You would then need to pay CGT on your apartment when you sell it in the future

#5 tobemommy

Posted 06 October 2019 - 09:22 PM

View PostPrincessPeach, on 06 October 2019 - 08:46 PM, said:

You can only have one place as your principal place of residence at a time - so theoretically if you choose for this new house to be your principal place of residence, then you can sell it cgt free. You would then need to pay CGT on your apartment when you sell it in the future

Great thanks so much for your reply.

So if we live at our new home for 3 months does that qualify for us to claim it as PPOR ? Or is there be any other alternative without  having to move in there ?

thanks !

#6 PrincessPeach

Posted 06 October 2019 - 09:59 PM

Living in it for 3 months would certainly be enough.

The current wording says the intent of living in there is sufficient- as for the actual interpretation of intent - id say having essential services connected would be a good start.

#7 spannerset

Posted 06 October 2019 - 10:10 PM

Your cost base will be the purchase price of the land, purchasing costs (stamp duty, settlement etc), all of the building and planning costs for the house, all of your holding costs (interest, rates, insurance, land tax, etc) and all of your selling costs (agent fees, settlement etc).  Figure out what your gain will be, split that between the owners, reduce by 50% for the discount, and if that doesn’t give you much of a gain then you might not need to worry about the main residence exemption - save yourselves the trouble of moving and keep the main residence exemption for your apartment.

#8 PrincessPeach

Posted 06 October 2019 - 10:14 PM

View Postspannerset, on 06 October 2019 - 10:10 PM, said:

Your cost base will be the purchase price of the land, purchasing costs (stamp duty, settlement etc), all of the building and planning costs for the house, all of your holding costs (interest, rates, insurance, land tax, etc) and all of your selling costs (agent fees, settlement etc).  Figure out what your gain will be, split that between the owners, reduce by 50% for the discount, and if that doesn’t give you much of a gain then you might not need to worry about the main residence exemption - save yourselves the trouble of moving and keep the main residence exemption for your apartment.

You worded that beautifully- my brain is so fried at the moment.

#9 SplashingRainbows

Posted 07 October 2019 - 06:41 AM

I think this might be helpful to you OP

https://www.ato.gov....ting-your-home/

And this, confirming if you wish to use the main residence exemption, you must move in
https://www.ato.gov....main-residence/

As PP said though you may find there is no need to use the main residence exemption.

Edited by SplashingRainbows, 07 October 2019 - 06:47 AM.


#10 tobemommy

Posted 09 October 2019 - 09:52 PM

Thanks everyone for taking time to reply ! I found it really helpful.

We lived in our apartment for 6 months before renting it out and we plan to live in the new house for 3 months before deciding whether to rent or sell.

By living there for 3 months and getting valuation done I am hoping it would give us a choice as to which of the properties we want to claim for CGT exemption... at least this is what we hope... !




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