澳洲Australia property Capital Gains Tax avoiding on new house |


在澳大利亚 I need some advice regarding a property purchase. Property - semi-detached house Bedrooms - 2 Condition - average needs internal reno to modernise Street - one of the best in suburb Location - excellent Close to schools - yes Transport - 50m The pool at of an IP needs to be resurfaced (or so the pool doctor says), the cost was estimated to be $10K ($10,000), after recoverying from my impresssion of a cat coughing up a fur ball, it just seems far too much. Its just a standard poo


Hi Somersofters
,
Long time lurker, first time poster. So please be kind.

I haven’t found any posts like our situation and ATO web site is vague on our particular situation.

Sorry another CGT question.

We was wondering if anyone has advice for our situation. We bought a block of land in May. We have already got plans into council to get a house built on it, intended for us to live in. Hubby has just been given his dream job in our dream location which means we will probably have to sell our house when it is built to buy in the new location. Can I still call it our PPOR (to avoid capital gains tax) if when it is built stay there on weekends with our furniture in it, remain on the electoral role at that address, pay for all utilities under that address. But also rented in our new location? We would only live in it for 6 months before selling. Would this give us CGT exemption as our PPOR.
Thanks for any advice.  

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You seem to be asking if you can consider a home that isn't your PPOR, your PPOR.

The answer is what you think it is.  

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Annabelle, Are you renting now ?

Token Funder, If Annabelle moves in, how long before she can decide to move wihtout it being an issue ?  

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You might be able to do what you want and move in and use it as a PPOR on weekends, holidays etc. On the other hand you will be paying rent and a mortgage.

But why are you confident that you will make a profit particularly if you are borrowing money?

Unless you are committed contractually to building may be you might be better to sell the land with a DA for a house to be built and plans.  

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Hi Jaycee,

Thanks for replying, I am really stressed out about this situation.

We are renting at the moment and we only own this property as it was going to be our PPOR. It will not be ready to move into until about April. We will be renting in our new location by then. I am hoping we can stay on weekends and keep it as our PPOR. Not sure how this holds up with the ATO but I have hear of people doing the same thing with costal holiday homes.

We are going to be paying rent and mortgage for a year.  

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If you are just going to hold it empty and come back to it for the duration you might be ok, but if you are moving away permanently - not such a good idea. Even worse if you are buying another house not renting, because you definitely can't claim cgt exemption on two properties at once.

If you're coming back within a year or so, why not just tell the builder to take their sweet time?

Hope you're not getting the FHOG for this or you're going to have some major issues if you're not living there within the first year.  

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Thanks RumpledElf,

We are not claiming FHOG.

OK Opening up my heart a bit.
There could be a chance that we move back permanantly to Sydney but not likely. We thought we would be in Sydney for atleast another two years so decided to buy a block of land and build. But now this job has come up where we want to live in Rural NSW (near our families). We just don't know what to do. The RE agent said it would rent for atleast $800 pw. It will cost us all up $750000 to build (including land). It would be a lucritive investment in a very tendy suburb of Sydney. It would sell very well too but will incur a huge CGT. But we will eventually want the money to buy a farm. Hence the very confused state of mind.  

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Annabelle said: ↑
It would sell very well too but will incur a huge CGT.Click to expand...
I'm not quite understanding of why you think you'd incur a huge CGT bill. Remember this tax is only paid, at your marginal rate, on the actual GAIN.

You purchased land in MAY. I doubt this has gone up much?? since then. Then you propose building on it. How much actual gain do you expect to make out of just putting a building on it?  

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Hi the CGT bill will be between $28000 - $75000 (depending on sale price). Working on hubbies and my marginal tax rates.

The land was bought very cheap for the area, (I know the area very well). The people we bought it off wanted a quick sale and unbelievably took what I offered.
RE agents are already circling, when I asked about rent they also gave a selling range. They were not far off what I would expect for a 4BR house 6km from Sydney CBD on a railway line.  

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That's a pretty staggering profit there, I'd guess way over $100k or even $200k after all the fees and costs of selling and so forth. But it means you've made a LOT of profit (a lot of time you just break even on these things) so why not just sell it and pocket all your spoils? Or keep it as a rental and use the equity (there's more equity available than you'd pay CGT on because there's no selling costs) to buy something else?

Also, you do realise you pay half as much CGT if you hold a house for more than a year, so why not rent it out for a year to reduce your holding costs *and* CGT bill and *then* sell it?  

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Annabelle said: ↑
Can I still call it our PPOR (to avoid capital gains tax) if when it is built stay there on weekends with our furniture in it, remain on the electoral role at that address, pay for all utilities under that address. But also rented in our new location? We would only live in it for 6 months before selling. Would this give us CGT exemption as our PPOR.
Thanks for any advice.Click to expand...
91 days.

91 days from the occupancy certificate and you can sell it, rent it or do whatever you like with it.

So long as it was your principal place of residence for that period you will be exempt from any capital gains tax.

So long as you are only renting and not claiming another property as your PPOR then you will not initiate a CGT event.

Pose this same question to your accountant, in just a 5 minute phone call, and you will have an even more definitive answer than you could possibly get from a forum of mostly unqualified but well meaning posters!

Will probably eliminate that needless stressing too!

Cheers

Rooster  

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Thankyou Rooster,

And everyone who has helped out with the CGT question. It is so greatly appreciated.  

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Rooster said: ↑
91 days.

91 days from the occupancy certificate and you can sell it, rent it or do whatever you like with it.

So long as it was your principal place of residence for that period you will be exempt from any capital gains tax.

So long as you are only renting and not claiming another property as your PPOR then you will not initiate a CGT event.Click to expand...
Hi Rooster - where did you get this from??

One needs to be careful not to be seen to be running an enterprise. A singular new house build can be an enterprise. If this is the case - in very loose terms - if you made $110k profit then $10k is paid as GST and the balance at your marginal rates. There is no CGT as you are trading. Thus if you held it for 3 years it wouldn;t matter, the profit would be assessed at your marginal rate. This is how property trading gets assessed at about 60% tax and property investing at about 25%

eod... if you have a big tax bill you have made money. the bigger the better please.  

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Ausprop said: ↑
Hi Rooster - where did you get this from??Click to expand...
Ausprop,

I wasn't suggesting that you could continually turn your PPOR's over like suggested in the 91 days.

However, a once off transaction as described would not be classed as trading, and as such would not be liable for CGT.

Circumstances for individuals change and that doesn't neccessarily mean they are running an enterprise.

That is the advice from my accountant.

I agree with you regarding the rules surrounding trading houses and the tax implications.

Cheers

Rooster  

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Again, a single phone call to the posters accountant would give a definitive answer based on their individual set of circumstances.

Cheers

Rooster  

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oh ok. last time I read up on all this there is no magic number of days, it all comes down to genuine intent, however you must live in the house at least 1 day. I think it is covered over at www.bantacs.com.au  

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Thanks for the link Ausprop.

It's interesting to read that a vacant block can still be considered your PPOR providing you build and move in within 4 years, and live there a minimum of 3 months. :eek:  

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That is incredibly interesting Bargain Hunter.  

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