julz05
Hi,
My brother and i purchased an investment property about 2.5 years ago and has been rented out the whole time. We have now decided to renovate and sell to make a nice profit, meaning we will be hit with CGT tax.
To avoid CGT or to pay minimal, when the tenants move out which is in a couple of weeks, can i get a market evaulation from a real estate agent and therefore the cost base is obviously what we paid for it and the sale price will be the market evaluation. We are going to renovate and live in it and make it our primary place of residence and sell in about 2 yrs. To avoid such a heavty CG tax is it possible to use the market evalution as our disposal price???
If not what could be a strategy to pay minimal CG other than holding it for a longer period of time???
Thanks you.
My brother and i purchased an investment property about 2.5 years ago and has been rented out the whole time. We have now decided to renovate and sell to make a nice profit, meaning we will be hit with CGT tax.
To avoid CGT or to pay minimal, when the tenants move out which is in a couple of weeks, can i get a market evaulation from a real estate agent and therefore the cost base is obviously what we paid for it and the sale price will be the market evaluation. We are going to renovate and live in it and make it our primary place of residence and sell in about 2 yrs. To avoid such a heavty CG tax is it possible to use the market evalution as our disposal price???
If not what could be a strategy to pay minimal CG other than holding it for a longer period of time???
Thanks you.
When a property is an investment property for part of the time then a PPOR. You can either:-
Use a %. ie if it was an IP for 5 years and a PPOR for 5 years, half the CG will be taxable.
OR you can get a valuation (as you suggested) at the end of the IP period. Then that will show the capital gains while it was an investment. This is what will be taxed. This is what I would do if you will do renovations as this will increase the value (assuming the capital gain will be much more than the cost of the renovation).
Timing your sale can be very beneficial. Eg sell in the year your income is the lowest. eg you are working part time etc. The lower your income is the less tax you'll pay.