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CGT on previous home

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A person owns 25% of home with his parents(75%) and lives in the property with his parents

But later he moves out and acquires another property with his spouse and live in the new property with his spouse..

What would be Capital Gains Tax implication for the 25% ownership on the previous home. His parents still live there but when they sell the property or those parents pass away, would he be liable for CGT on the gain?

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Hi @rkimau,


Thanks for getting in touch!


Generally speaking most real estate is subject to capital gains tax (CGT), with the exemption of your main residence (your home). If a person acquires a new home before disposing of an old one, they may be able to treat both dwellings as the main residence for up to six months. You can find more information relating to Your main residence on our website.


If a property is owned by two or more people, they can be considered as tenants in common or as joint tenants. If a joint tenant dies, their interest (share) of the property passes to surviving joint tenants, it's not considered an asset of the deceased estate. If the residence was the deceased's main residency, the surviving joint tenants may be entitled to the main residence exemption for the interest they've acquired.


Capital gains tax doesn’t apply when an asset is inherited - it may apply when the asset is later sold or disposed of as many CGT rules apply relating to a deceased estate. You should seek specialist advice in relation to the CGT implications of passing on or disposing of the assets of a deceased estate.


The time a CGT asset is acquired is important for many reasons, the main one being a CGT generally doesn't apply to assets before 20 September 1985. Find this information and the other reasons in our Guide to capital gains on our website.


If you would like specific information relating to your circumstances you can contact our Early engagement team by submitting an request form or requesting a call back and someone will contact you and discuss your circumstances further.

 

Thanks.

3 REPLIES 3

Best answer

ATO Certified

Community Support

Replies 1

Hi @rkimau,


Thanks for getting in touch!


Generally speaking most real estate is subject to capital gains tax (CGT), with the exemption of your main residence (your home). If a person acquires a new home before disposing of an old one, they may be able to treat both dwellings as the main residence for up to six months. You can find more information relating to Your main residence on our website.


If a property is owned by two or more people, they can be considered as tenants in common or as joint tenants. If a joint tenant dies, their interest (share) of the property passes to surviving joint tenants, it's not considered an asset of the deceased estate. If the residence was the deceased's main residency, the surviving joint tenants may be entitled to the main residence exemption for the interest they've acquired.


Capital gains tax doesn’t apply when an asset is inherited - it may apply when the asset is later sold or disposed of as many CGT rules apply relating to a deceased estate. You should seek specialist advice in relation to the CGT implications of passing on or disposing of the assets of a deceased estate.


The time a CGT asset is acquired is important for many reasons, the main one being a CGT generally doesn't apply to assets before 20 September 1985. Find this information and the other reasons in our Guide to capital gains on our website.


If you would like specific information relating to your circumstances you can contact our Early engagement team by submitting an request form or requesting a call back and someone will contact you and discuss your circumstances further.

 

Thanks.

Newbie

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Thanks for your reply.

If her parents sell the property in both scenarios( tennant in common or joint tennant) while they are alive, what would be her CGT position on ther share of ownership?

Thanks.

Community Support

Replies 0

Hi @rkimau

 

Generally speaking it will depend on whose names are on the title of the property and the percentage of ownership. If her name is on the title, then normal CGT rules would apply to her percentage of the sale. As mentioned previously, if you'd like to receive a more specific information relating to your circumstances you can contact our Early engagement team by submitting an request form or requesting a call back and someone will contact you and discuss your circumstances further.

 

Thanks. 

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