Tax Question- Stamp Duty on Cost Base

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  MeesusEff on 12/04/2023 - 21:58

  Sounds like he falls under the 6 year rule, which exempts him from CGT. Not sure if that works out to be better for him

  • 

    MS Paint on 12/04/2023 - 22:51

    What?

    • 

      MeesusEff on 13/04/2023 - 00:13

      If you have lived in a property then rented it out after, you have 6 years from the move out date where you don't need to pay CGT. That was what our accountant told us since we sold ours around the 5 year mark. I don't know if there's a minimum time where he needed to live in it though

      "The capital gains tax property six-year rule allows you to use your property investment, as if it was your principal place of residence, for a period of up to six years, whilst you rent it out.

      This means that you would be able to sell the property within the six-year period and be exempt from paying capital gains tax just as you would if you sold the house considered your main residence. "

      • 

        zoombie on 13/04/2023 - 00:29

        man, the Federal government sure do love property investors. Here have a 6 yr tax break on us. Renters? who cares!

        • 

          Lunarboogie on 13/04/2023 - 06:30

          +2

          @zoombie: Investors add to the stock of houses that renters call home. Or would you prefer that the Feds construct homes for all in this socialist utopia?

          • 

            zoombie on 13/04/2023 - 09:36

            @Lunarboogie: I would prefer investors operate a business like everyone else i.e. be profitable and not subsidised by the tax payer. If the losses are to be borne by the tax buyer, then yes, I would prefer it the Feds construct home for all and lease it out. At least with the Feds, you get a stable long term rental solution and not subject to whimsical rent hike or getting kick out. Before you do name calling like socialist utopia, you might to to educate yourself on other housing model like the Singaporean ones.

            • 

              Lunarboogie on 13/04/2023 - 10:29

              @zoombie: I wasn't name calling. Nor would I want Australia modelling its social policies on a police state like Singapore. And I certainly don't think the Feds could do as an effective job intervening in the housing market as the free market. Both renters and landlords get concessions. Balance is good.

              • 

                zoombie on 13/04/2023 - 10:47

                @Lunarboogie: What renter concession are you referring to? You mean the rent assistance for people on welfare?

        • 

          Alexander420 on 13/04/2023 - 07:33

          @zoombie: Renter can become property investors too. Ever hear “hate the game, not the player?”

          • 

            zoombie on 13/04/2023 - 09:37

            @Alexander420: lol - if it's that easy to become a landlord in this country on an average wage, shouldn't we all be landlord by now?

        • 

          netjock on 13/04/2023 - 09:32

          @zoombie: That is if you sell. Also if you lived in it.

          Imagine having to live in every property you buy for 12 months. Don't forget you might sell at a loss.

          I don't think either renters or landlords actually know what they are in for, neither do they know the implications. It is just people throwing the pebble that fits at each other.

      • 

        Crow K on 13/04/2023 - 08:58

        The devil's in the details - this rule only applies if you haven't nominated another property as your Primary Place of Residence in the meantime.

        If you're renting, you don't care, but if you've bought another house to live in (Property B) then you're missing out on your Property B PPOR exemption and thus a portion of that will be CGT liable on its sale.

  • 

    freefall101 on 13/04/2023 - 09:44

    +1

    The 6 year rule only applies if you don't have another PPOR. You can't have two at once.

    • 

      Donaldhump on 13/04/2023 - 11:28

      +1

      you chose PPOR at time of CGT event.

      you can move from prop A to prop B and decide when you sell prop A to make it the PPOR for the period you lived in B up to 6 years.

    • 

      MeesusEff on 13/04/2023 - 15:05

      +1

      More details needed from OP, we moved into my parents place so we didn't have another property under our names. Our accountant said we didn't need to pay CGT in our situation. Not sure if he moves into a place that's not under his name (maybe just partner) if that will still be exempt

      • 

        freefall101 on 13/04/2023 - 16:26

        Yeah, basically why my post below says talk to an accountant. There's no "right" answer to the question without knowing all the facts.

  • 

    Donaldhump on 13/04/2023 - 11:13

    depends when he first moved in.

    if rented 8 months, then lived in 8 months = no cgt first 8 months
    if lived 8 months, then rented in 8 months = cgt free

  • 

    Drakesy on 13/04/2023 - 11:44

    I was of the understanding that it would be taken from the date you moved out and it no longer was a PPOR - i.e the value of it from this date until you sell the investment property would be subject to CGT.

• 

  freefall101 on 13/04/2023 - 09:55

  +3

  Step 1: Talk to an accountant. Unless your uncle is willing to send all his personal details to Ozbargain the answer will be "it depends" for almost every question here. It depends how many properties he owns, whether he had other PPOR, he should have done a valuation when it converted from PPOR to rental which would form the CGT base and not the purchase price, etc. Need to think about what has been spent on the house, when it was spent on the house, etc to give an informed answer.

  However you're right on the costs, stamp duty and agent fees will probably reduce the CGT on the sale.