Hello!
I have been reading some articles in the community, but they might be too behind with recent rule changes. I am finding it hard to get a up to date and specific details about Capital Gain Taxes for my case (which is not too complicated), and hoping if this wonderful forum could help.
We are currently living in our Principal Place of Residence (PPoR) in suburb A. About 3 years ago, in 2022, we purchased an investment property (IP) in suburb B and we rented it out since we purchased it. As of now, it has tents. Our plan is to end the lease agreement in a couple of months (by end of 2025), knock it down, and rebuild a new house. Then, we move in the new house as our PPoR. We are planning to sell our property in suburb A before moving into the new house in suburb B when it is ready.
My question is therefore about CGT, timing, and value of property in suburb B.
1- From when the tenant leaves until we move into it as our PPoR, is the property/land an Investment Property?
1A: if YES, does it means the property can be used for negative-gearing? can the cost of knock-down & rebuilding be calculated towards deductibles for Capital Gain Taxes?
1B: if NO to question 1, then how CGT is calculated at the time of selling the house after, e.g. 20 years (year 2045)? We can get a real-estate agent to provide an appraisal for the market value the property just after the tenant leaves. Can this appraisal be used in year 2045 to calculate the CGT of property? By this, I mean the Capital Gain of IP period, which is CGT of investment for (Appraisal Amount - purchase price) + CGT of PPoR for (sell price - (appraisal + build-cost)).
I am mostly uncertain about the gain & deductibles during IP and PPoR periods. Thanks for helping, it is greatly appreciated.
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