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CGT calculation

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Hello,

 

I had purchased an investment property in 2008.  I have at different times rented it out, lived in it and also did Airbnb for a period of time.

 

Important dates:

 

21/05/08 - Purchased investment property

18/07/08 - Rented (start)

05/08/11 - Renting (end) (3 years + 18 days)

05/08/11 - Moved in ( main place of residence )

18/06/15 - Airbnb (start) - Shared 17% floor space of the home

26/06/18 - Airbnb (end) (3 years + 8 days)

22/02/19 - Sold the property

 

It is my understanding that whenever a property is occupied as a main residence, it will be exempt from capital gains tax (CGT) for that period of time and when the dwelling is reoccupied as the main residence, the six-year exemption resets.

 

So another six years of exemption is available from the date it next becomes income producing. 

 

So does this mean I am CGT free as I have lived in my main residence for over 7.5+ years but had it as an income-producing Airbnb for only 3 years before I sold the property (still within the 6-year reset period)?

 

Or, as I had the property as an investment property before I had chosen it as my main residence CGT will apply.  If this is the case, could I calculate it like this?

 

GST free period = Total ownership period - Rental period - Airbnb period.

option 1 - GST = GST non-free period - 50% ('lived in it more than 12 months')

option 2 - GST = CST non-free period - 6 years ('6-year rule') - 50% ('lived in it more than 12 months')

 

If I have this wrong, are you please able to help me understand how the CGT will be calculated?

 

Thank you

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ATO Certified

Taxicorn

Replies 1

You only get the main residence exemption if you move out of it after initially living in it.

So if you moved out when you Airbnb'd it would start then.

 

So no you only get 100% exemption for (settlement date when bought until date rented )+ (days lived in 100% (5/8/11 - 18/6/15))  + (period 23/8/16 until settlement date to sell).

 

You will get a part exemption for the period it was Airbnb.

 

Start off working out total days owned (the period between settlement date when bought and settlement date when sold) so without knowing exactly what they were I have used the settlement dates are 21/05/08 and 22/2/19 = 3,928 days.

 

So days rented = 1,112 days

Airbnb = 1,097 days x % of total area used (private to airbnb + % of shared areas)

 

The CGT calculation will be quite complicated as you need to work out a cost base first (Amount Paid + Buying Costs + selling costs + 3rd element (holding costs) and subtract from the Sale price, this gives you an initial CGT

 

Then you would Multiple the initial CGT result by 28.13% (1112/3928) and add to that The Initial CGT x (1097/3928)x floor area used.

 

Then you would multiply by 50% as owned for more than 12 months.

 

3d Element costs would be 100% of the periods not rented or Airbnb and by x% of the period that it was Airbnb

 

x% = 100% - floor area used for Airbnb.

 

Like I said quite complicated but ensure you know the total area used (private to Airbnb + % of shared areas), all buying and selling costs, all holding costs for periods specified above.

 

Note % of shared areas depends on how many people lived at address - 50% if you 2 people you and Airbnb client or 25% if you plus 2 family members + Airbnb client etc.

 

 

 

2 REPLIES 2

Best answer

ATO Certified

Taxicorn

Replies 1

You only get the main residence exemption if you move out of it after initially living in it.

So if you moved out when you Airbnb'd it would start then.

 

So no you only get 100% exemption for (settlement date when bought until date rented )+ (days lived in 100% (5/8/11 - 18/6/15))  + (period 23/8/16 until settlement date to sell).

 

You will get a part exemption for the period it was Airbnb.

 

Start off working out total days owned (the period between settlement date when bought and settlement date when sold) so without knowing exactly what they were I have used the settlement dates are 21/05/08 and 22/2/19 = 3,928 days.

 

So days rented = 1,112 days

Airbnb = 1,097 days x % of total area used (private to airbnb + % of shared areas)

 

The CGT calculation will be quite complicated as you need to work out a cost base first (Amount Paid + Buying Costs + selling costs + 3rd element (holding costs) and subtract from the Sale price, this gives you an initial CGT

 

Then you would Multiple the initial CGT result by 28.13% (1112/3928) and add to that The Initial CGT x (1097/3928)x floor area used.

 

Then you would multiply by 50% as owned for more than 12 months.

 

3d Element costs would be 100% of the periods not rented or Airbnb and by x% of the period that it was Airbnb

 

x% = 100% - floor area used for Airbnb.

 

Like I said quite complicated but ensure you know the total area used (private to Airbnb + % of shared areas), all buying and selling costs, all holding costs for periods specified above.

 

Note % of shared areas depends on how many people lived at address - 50% if you 2 people you and Airbnb client or 25% if you plus 2 family members + Airbnb client etc.

 

 

 

Newbie

Replies 0

Thank you very much for your detailed explanation.

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