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main residence CGT exemption for partially owned property

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Newbie Registered Tax Practitioner

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I have a property which I own the majority interest and my parents own the balance - it's been my main residence since purchase a few years ago. I'm an Australian tax resident over 18. 

My question is: 1. for my ownership interest, I'm entitled to main residence CGT exemption and 6 year absence rule if I rent it out. 2. for my parents' ownership percentage, they'll be subject to CGT the same way as if it is an investment property if / when the property is sold. Are both statements correct?

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Most helpful response

Taxicorn

Replies 1

I presume that you and your parents are listed as tennants in common and all listed on the title?

 

1. Yes as long as you do not own any other property.

2.Yes they will be subject to any CGT x ownership percent.

 

CGT will be based on total days rented (outside 6 year rule) / total days owned.

 

So if owned for 10 years then (8 x 365 + 2 x 366)  = 2920 + 732 = 3652 days owned.

For the 10 years; not rented for first 2 years, Absent for 6 years leaving 2 years outside period = 730/3652 = 19.99%

 

You can of course return after 5-6 years, re-instate PPR for a year or so and then move back out for 5-6 years etc

This way there will be no CGT, but you need to NOT own any other property, if you do then it gets a little more complicated....

 

Your parents will need to also report rent etc on their tax returns.

 

 

 

2 REPLIES 2
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Most helpful response

Taxicorn

Replies 1

I presume that you and your parents are listed as tennants in common and all listed on the title?

 

1. Yes as long as you do not own any other property.

2.Yes they will be subject to any CGT x ownership percent.

 

CGT will be based on total days rented (outside 6 year rule) / total days owned.

 

So if owned for 10 years then (8 x 365 + 2 x 366)  = 2920 + 732 = 3652 days owned.

For the 10 years; not rented for first 2 years, Absent for 6 years leaving 2 years outside period = 730/3652 = 19.99%

 

You can of course return after 5-6 years, re-instate PPR for a year or so and then move back out for 5-6 years etc

This way there will be no CGT, but you need to NOT own any other property, if you do then it gets a little more complicated....

 

Your parents will need to also report rent etc on their tax returns.

 

 

 

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Newbie Registered Tax Practitioner

Replies 0

Thanks!