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Question around Depreciation of foreign Asset & CGT

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Dear ATO team, I am currently in Dubai and have a property where I lived throughout my stay and due to market conditions, will be renting it on return. Questions:

 

  1. I cant find quantity surveyors in the country for preparing value of depreciation assets
  2. For valuation of the property, only real estate agents provide property valuation, their is no professional body which does it. will such valuation acceptable. 
  3. My understanding is that on the day I become resident for tax purposes, I will be using the A$ conversion rate to have the property value and similarly A$ rate on the day property is sold for Capital Gains or Capital Loss. 
  4. Will I still be liable for CGT, in case I dont claim depreciaion but at the same time I pay tax on its income.
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TaxTime Support

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Hi @ftareen

 

Thanks again for your post.

 

Bruce4Tax is correct there are various methods we approve for valuation purposes. See Market valuation for tax purposes.  However if this is the only property you own it may qualify for Main Residence exemption and the 6 year rule should allow you enough time to dispose of it and not incur CGT. See CGT exemption for main residence. Even if you do own other properties you still have the option if eligible to apply the exemption to it.

 

Obviously then any other properties overlapping that same time period would  be subject to CGT upon sale. As to renting, the normal rules apply whether the property is in Australia or overseas. See Rental Guide also Moving to Australia permanently.

 

Hopefully this will help.
Kind regards
MarkA

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Devotee Registered Tax Practitioner

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I cant find quantity surveyors in the country for preparing value of depreciation assets

 

Builders can also provide these reports, but you will beed to provide a sample so they know what you need.

 

For valuation of the property, only real estate agents provide property valuation, their is no professional body which does it. will such valuation acceptable. 

 

Yes, if you get a full valuation, not just an appraisal.

 

Will I still be liable for CGT, in case I dont claim depreciaion but at the same time I pay tax on its income.

 

Yes.  Also, total claimed for building depn has to be added back to cost base when you sell.

 

 

Best answer

TaxTime Support

Replies 1

Hi @ftareen

 

Thanks again for your post.

 

Bruce4Tax is correct there are various methods we approve for valuation purposes. See Market valuation for tax purposes.  However if this is the only property you own it may qualify for Main Residence exemption and the 6 year rule should allow you enough time to dispose of it and not incur CGT. See CGT exemption for main residence. Even if you do own other properties you still have the option if eligible to apply the exemption to it.

 

Obviously then any other properties overlapping that same time period would  be subject to CGT upon sale. As to renting, the normal rules apply whether the property is in Australia or overseas. See Rental Guide also Moving to Australia permanently.

 

Hopefully this will help.
Kind regards
MarkA

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Mark, Thanks for your extremely helpful feedback. I have only one property overseas while on international assignment and was our principal residence. House in Sydney which was meant to be PR, was always been rented and I am advised that house will be treated as investment. I do intend to demolish it and eventually live in it but that could take time and will give me enough time to sell my house in Dubai.

 

 

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