Browse Forums General Discussion 1 Nov 01, 2013 4:05 pm Hey All, I was just hoping to get a little insight into the CGT. When the time does finally come i will see my accountant but just for now im keen to see if there is any methods in which to avoid it. I will break down the scenario. My brother and I purchased a property and we have been living in it for 2 years. We are currently in the process of developing at the rear of the property whilst I continue to live in the original home. My brother has moved out after spending 2 years in the property. We will both be on the titles for both properties. So my question is how can we avoid paying CGT or at least soften the blow? My first thought is could we both move into the rear property for 1 year before sale whilst we rent out the front property? We are really open to any ideas that could remove or reduce the CGT but it would need to be within a year of the completion of the property as past that the increased mortgage for the build will out shadow the savings of not paying CGT. Thanks in advance Re: Can you avoid capital gains? 1st time developer. 2Nov 01, 2013 5:37 pm Just sell it for a loss, then you avoid CGT all together. Just joking. You hear all the "just live in it for a year talk" in the end you need to satisfy the ATO it is the principal place of residence. Just get some tax advice from your accountant as you have suggested you will, because the accountant will have a full knowledge of both you and your brothers financial situations and be netter placed to advise you IMO. Re: Can you avoid capital gains? 1st time developer. 3Nov 01, 2013 6:58 pm Pretty sure if one of you move in for at least 12 months and claim it as your principal place of residence then you should avoid CGT on any future sale. As there are 2 of you on the title you could claim one residence each until sale. Seek professional advice though. Re: Can you avoid capital gains? 1st time developer. 4Nov 01, 2013 10:28 pm I think that you need the house to be PPOR for it to avoid GCT. If it is rented then lived in as PPOR then the gain is apportioned based on time rented and time PPOR. Radiuz are you a tax accountant? or an Accountant? I am not sure what happens when the title is in both your names as you may only be able to claim that half is your PPOR as the other half is not legally yours. That means if you claim one each then the gain would be 50% subject to GCT. If you shift one each into each name I think you would be up for stamp duty. I would research the requirements and exclusions around principle place of residence and joint ownership to see what can and cannot be done with respect to CGT. +1 for the "forget the just live in it" don't go to forums for professional advice. Good luck. Best regards Mark Re: Can you avoid capital gains? 1st time developer. 5Nov 02, 2013 11:44 am Not an accountant but have spoken in length to my accountant about this. Your principal place of residence is not what is on a title, its where you actually live and claim on your tax return, receive mail, rates etc. As the question is about 2 brothers who co-own land, each would be entitled to claim one of the dwellings each as a PPOR. Agreed that you should seek professional advice regarding the situation but I would be surprised if CGT was payable in a situation like this. Re: Can you avoid capital gains? 1st time developer. 6Nov 02, 2013 1:32 pm Tax is often quite complex hence why there are specialists to provide advice. Both would have to claim PPOR on the residence being sold and would have to show that they live there, if only one claims PPOR I doubt that the entire property would be exempt from GCT. That is the point I am trying to make, although both could claim house one each the exemption would only attach to those claiming it and since it is joint owned then if only one is claiming PPOR for the property being sold then potentially half of the gain would be subject to CGT. You may be surprised.... well if only one brother is claiming PPOR I would be surprised if CGT did not apply. BTW, I hope you also understand that filing taxes is on a self declaration basis and if all goes well it does not necessarily mean that all has been accepted. It may just mean that you have not been looked at. It was a long time ago when I qualified but it used to be 7 years unless something was suspected. Go to a professional tax advisor and see what the tests are that need to be satisfied so that you are not disadvantaged. Cheers Mark Hi there, We’ve recently had plans approved to add a 1st storey addition to our existing house for a growing family in Sydney. With the current cost of building… 0 4250 2 10946 Hey everyone Not for me or anyone I know, just generally interested. For a single allotment house, are you allowed to take the fence on both sides of your house and… 0 20728 |