Hello friends, I have a question related to CGT of my property. Hope my fellow OzBargainers would be able to shed some light.
Acquired a house in early 2021. We might have to travel to India on a job assignment for 3 years. Planning to rent out the house during that period (2024 - 2027). Let's says we sell this house when we come back in 2027 (Will be Australian resident)
Does CGT or any other tax apply to this sale?
Appreciate any pointers.
Thanks
Thank you.
Usually, a property stops being your main residence when you stop living in it. However, for CGT purposes you can continue treating a property as your main residence:
for up to 6 years if you used it to produce income, such as rent (sometimes called the '6-year rule')
During the time that you treat the property as your main residence after you stop living in it:
It continues to be exempt from CGT (the same as if you were still living in it, even if you start renting it out after you leave).
Check out the 6 year absence rule.
If you’re an Aussie resident and sell within the 6 years. Will be exempt
Thank you.
Noting that even if you sell after 6 years, you still only pay a proportion, I. E., at 7 years it would be 1/7 of the total cgt you pay tax on.
No, the 6 year rule is not a carve out. DingoBilly is correct.
If the property is sold after more than 6 years of being used to produce income, the taxpayer will only be able to claim the main residence exemption for the first 6 years of the income-producing period. For the period beyond the 6 years, the taxpayer will need to pay CGT on the portion of the capital gain that relates to the time the property was used to produce income beyond the 6-year limit.
I was in a similar boat where I move to my parents and rented out my house. Because I didn't have another peppery in my name, it was cgt exempt as I sold it 3 years after I moved out
another peppery
Like Pepper Pig?
You salty?
My pepper farm of course! 😂
It was a spicy tax exemption
No, it’s a parcel of land where they harvest peppers. I think he owns McCormack.
Peter picked a peck of pickled peppers
When you come back make sure you are Australian tax resident for tax purposes. Otherwise you are going to be taxed 32.5% from $1.
This is actually a really cheap query to a tax accountant. Call a few up and nice ones will give you 15 minutes of their time and give you the full details. You'd spend more time dealing with the pieces of the puzzle answers here.
This is actually a really cheap query to a tax accountant
Why pay when you can get free advice from OZB.
Takes more time to compile all the answers than actually having to research to make sure information isn't conflicting.
As much as I like OP to get caught as a foreign tax resident due to being a day short of being in the country. Most people knows the laws being a tax resident but when you are overseas you might be tax resident in another country.
Also if they have different financial years you might be tax resident in two countries and if the country you left really wants to pursue you for taxes and they don't recognize PPOR CGT exemptions you are up the creek.
The only thing i didnt do was to put a /s after my sentence as I thought it was sarcastic enough.
i do find myself looking at commercial real estate occasionally
https://www.ato.gov.au/individuals-and-families/investments-…