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_ayoo999(Newbie)Newbie
24 June 2021

Hello!

Really appreciate your help on this one to assist with the changing needs of our growing familiy, we will need to move house soon!

To summarise i've just recently sold on property and living in a second one, which will need to be sold as well. I am seeing whether we will trip up a CGT liability on sale of the second property

Sep 2017 - Property #1 purchased and lived in

Sep 2019 - Property #2 purchased and moved into. Property #1 rented out

7 July 2021 - Property #1 sold and settled. (contracts exchanged 3 June 2021)

My question is i've now sold property #1, which i've treated as my main residence for the entire period of ownership, can i then right away treat property #2 as my main residence from the next day (say 8 July 2021) and if i were to sell it in August 2021, will i be liable for any CGT?

Thanks all!

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6 replies
9,423 views
6 replies

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Most helpful replyATO Certified Response

_KaraBATO(Community Support)Community Support
ATO Certified Response24 June 2021

Hello @ayoo999.

Yes you can treat property #2 number 2 from 8 July 2021.

Yes you will be liable for a CGT if you sell property #2. This is because you can only one property at a time as your main residence.

You will be able to claim a partial exemption for property #2 for the time it was considered you main residence.

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Most helpful replyATO Certified Response

_KaraBATO(Community Support)Community Support
ATO Certified Response24 June 2021

Hello @ayoo999.

Yes you can treat property #2 number 2 from 8 July 2021.

Yes you will be liable for a CGT if you sell property #2. This is because you can only one property at a time as your main residence.

You will be able to claim a partial exemption for property #2 for the time it was considered you main residence.

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_ayoo999(Newbie)Newbie
6 July 2021

@KaraATO

I have a follow up question

We're now looking at potentially deeming property 2 our main residence from the day it was purchased.

There is a period where property 1 is vacant for 2 months (Sep 2019 to Nov 2019) - until it is rented out.

With Property 1, we are using Erin's example, and resetting our cost base to be the value when we first rented it out : https://www.ato.gov.au/General/Capital-gains-tax/Your-home-and-other-real-estate/Your-main-residence/Using-your-home-to-produce-income/#Homefirstusedtoproduceincome

When it comes to calculating our capital gain, i have a question on capital proceeds - Are there any selling costs i can attribute to the sale and reduce the capital proceeds. Or does capital proceeds simply equal sale price?

Also are there any deductions or additions to cost base available for expenses incurred during the 2 months property 1 was vacant? say interest expense on loan and other holding costs?

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