Hi,
I'm planning to move into my investment property that I bought about 7 years ago and has been rented from the beginning.
This house will become my PPR and it requires substantial renovations (over 200k) before I can move in.
I understand that CGT / MRE are pro rata based. I just can't figure out the implications of substantial renovation to CGT / MRE.
For example, if
- it was bought on 01/01/2018 and rented until 31/12/2024 (7 years)
- purchase price was 500K
- renovation starts at 01/01/2025 and finished by 31/03/2025 (3 months) and cost was 200K
- it become my PPR on 01/04/2025 until 31/03/2032 (7 years) and sold for 1.2M
in this situation, can the renovation cost (i.e. 200K) directly reduces my NET profit?
like Net profit = 1.2 M - 500K - 200K - expenses (stamp duty + legal fees + etc)
or only the half (i.e. 100k) will be applied because I lived 50% of the period?
or none of above?
(I'm aware of CGT discount (50%) over 1 year and so on. this question is mainly about how the renovation cost that I will spend after tenant has moved out and before I move in, can reduce CGT)
Thanks in advance and look forward to hearing your advice!
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