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Re: Am I exempt for capital gains tax

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Newbie

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I had purchased my first ever property in 2012. I lived in it for 7months. Had it rented for 4 years. Then moved back in and lived in it for 2 years. I then bought a new property with my partner and moved into that. I have had the original house rented for 3 years.
Up until I bought my second property it was my primary place of residency.
I am selling the original house now as we cannot afford to have 2 properties, but am I exempt from CGT?
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Devotee

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Up until I bought my second property it was my primary place of residency

From the date you purchased your second property & made it Principle Place Of residence (You have lost your CGT exemption from that date onwards on your first property, (You can not claim CGT exemption on two proerties at the same time) the time before that you are entited to CGT exemption as long as you have met all other exemption criterias) however the CGT will only be calculated from the date you acquiried second property not for the entire period you have held your first property. Also you will be entitled to 50% CGT discount given the fisrt property was held for 12 months or more

You also may choose the first property as CGT exepmt, but in that case your second property will attract CGT (You can not claim CGT exemption on two proerties at the same time)

check out this link to calculate your CGT 

https://www.ato.gov.au/general/capital-gains-tax/working-out-your-capital-gain-or-loss/

4 REPLIES 4
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Most helpful response

Devotee

Replies 0

Up until I bought my second property it was my primary place of residency

From the date you purchased your second property & made it Principle Place Of residence (You have lost your CGT exemption from that date onwards on your first property, (You can not claim CGT exemption on two proerties at the same time) the time before that you are entited to CGT exemption as long as you have met all other exemption criterias) however the CGT will only be calculated from the date you acquiried second property not for the entire period you have held your first property. Also you will be entitled to 50% CGT discount given the fisrt property was held for 12 months or more

You also may choose the first property as CGT exepmt, but in that case your second property will attract CGT (You can not claim CGT exemption on two proerties at the same time)

check out this link to calculate your CGT 

https://www.ato.gov.au/general/capital-gains-tax/working-out-your-capital-gain-or-loss/

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Community Support

Replies 2

Hi @Kawesome,

 

As @Logical_smsf has advised, up until you purchased your 2nd property you would be exempt from CGT. You still need to work out market value of your original property from the time you first used it to produce assessable income.

 

You will then use the partial exemption calculation to work out your capital gain/loss. You can include the time it was deemed your main residence up until the date of contract for your 2nd property. 

 

If you have further questions please post them here.

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Newbie

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Thanks for the info.

I was told by my accountant that I had 6 years from when I purchased my second property I would be exempt from capital gains as it was my primary place of residency.

Is that information incorrect
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Devotee

Replies 0

Only if you did not own another property during that 6 year period, the exemption will cease from the date of the second propery purchase (If the second property becomes your PPOR as the CGT exemption can only be applied to 1 proerty at a time) Lets assume the second proerty was bought after 5 years of 1st one, then the CGT exemption only applies till 5 years, after that the CGT clock starts (The 6 year rule only applies if you did not acquire second property with in that 6 year period & called it PPOR with the 6 years period)