ATO Community

Re: CGT on property lived in then rented

Ask a question

Newbie

Views 75

Replies 4

My wife and I purchased an apartment in 2009 for $460,000. Between 2009 - 2015 we were owner occupiers of this apartment.

 

In 2015 we decided to purchase a house. As such, we turned the apartment into an investment property and began renting it out. The house became our principle place of residence. We also had the apartment evaluated in 2015 (before moving out) and it was valued at $850,000.

 

We now want to sell the apartment but want to know what the CGT liability will be? For instance if we sell the apartment at $900,000 is the CGT based on the gain we made on the initial purchase price of 460,000 when we were owner occupiers?

 

Or is it the valuation price of 850,000 as of 2015 when it became an investment property ?

 

Thanks!

 

 

 

1 ACCEPTED SOLUTION

Accepted Solutions

Best answer

Taxicorn

Replies 3

@fambo 

 

It all really depends on whether you want to continue to nominate the apartment as you "Principal Place of residence" or not.

 

You can for up to 6 years after moving out as you initially lived in it first.

 

If you do then there will be no Capital Gains Tax on the apartment but this will mean that your "House" will be liable for Capital Gains Tax from 2015 until you sell the apartment.

 

It all depends on which scenario will yield you with the least Capital Gains Tax.

 

If you don't nominate the "apartment" then the cost base will start at $850,000 the value when you first started to rent it out.

 

Capital Gains Tax is quite complicated and there are many ways to lessen this by adding to the cost base various buying/selling costs but you must also deduct any capital works depreciation that you have claimed.

 

Best to seek advice from a Tax Professional as this could end up saving you a lot of money.

 

You can also reduce the Capital Gains Tax by using the roll-over" feature of concessional super contributions and claiming them as tax deductions but that is another story........

 

 

4 REPLIES 4

Best answer

Taxicorn

Replies 3

@fambo 

 

It all really depends on whether you want to continue to nominate the apartment as you "Principal Place of residence" or not.

 

You can for up to 6 years after moving out as you initially lived in it first.

 

If you do then there will be no Capital Gains Tax on the apartment but this will mean that your "House" will be liable for Capital Gains Tax from 2015 until you sell the apartment.

 

It all depends on which scenario will yield you with the least Capital Gains Tax.

 

If you don't nominate the "apartment" then the cost base will start at $850,000 the value when you first started to rent it out.

 

Capital Gains Tax is quite complicated and there are many ways to lessen this by adding to the cost base various buying/selling costs but you must also deduct any capital works depreciation that you have claimed.

 

Best to seek advice from a Tax Professional as this could end up saving you a lot of money.

 

You can also reduce the Capital Gains Tax by using the roll-over" feature of concessional super contributions and claiming them as tax deductions but that is another story........

 

 

Newbie

Replies 2

Thanks for response @macfanboy 

 

So lets say I nominate my house as priciple place of residence. 

 

If I sell the apartment at $900,000 is the realised gain based on the initial purchase price at 460K or the accreditated CGT valuation report that was conducted in 2015 - $850,000? 

 

Thanks

 

 

Highlighted

Taxicorn

Replies 1

@fambo 

 

Sorry, I had to readjust my previous response.

 

Yes the Initial Cost base will be the value when you first started to rent it out $850,000

Newbie

Replies 0

@macfanboy I thought that was the case. Thanks for confirming. 

Top Solution Authors