Hi,
We purchased our investment property in the early 90's, we rented for approx 18 years and moved into as our PPOR for approximately 3 years.
I'd like to have an answer on the following scenario please?
If you purchased a rental property for $140,000.00, after 18 years the rental property was valued by a real estate agent at $255,000.00. In the following 3 years the house became a PPOR and a major refurbishment on the home and garden was done, increasing the value to $460,000.00.
I rang the ATO early in 2020 and was given an answer of:
From the time a house becomes a principal place of residence, any improvements that have improved the value of the house will not be included in capital gains tax as no taxable income was being generated.
Our accountant is telling us that we we have to pay capital gains on a proportion of the whole value of the house, using a formula given by the ATO. Meaning the works that we completed to bring the house up in value has no bearing because we have to follow this formula.
Can you clear this up for me please?
Regards
Heather
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