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Capital Gains Tax Saving

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  • Capital Gains Tax Saving

    Hello All

    I have a question about a way of saving Capital Gaines Tax.

    I have owned an investment property for more than 6 years. When I acquired it I immediately rented it, and therefore I am not eligible for any CGT exemptions. I currently live overseas, and I am planning to come back to Aus.

    If I was to move into the property for at least 6 months as my Primary Residence, and then move out, would I be able to claim it as my Primary Residence from the time I moved in and get the capital gains tax savings? ie, I live in it for 6 months, then rent again for maximum 6 years, but it is still my Primary Residence. Then move back for a period of time and sell it. Would those 6 years be recognised as time I am legible for the tax reduction, or am I stuck because I did not live in it when I made the original purchase?


  • #2
    What was your original intention when you purchased the property?


    • #3
      Originally posted by N-E-D View Post
      What was your original intention when you purchased the property?
      My intention was to rent the property and then eventually to move into the property as my primary residence


      • #4
        My understanding is that you will be exempt from CGT, as you purchased the property for rental (and potentially PPOR) reasons. If you had purchased with the plan of selling later for capital gains, then you wouldn't be exempt. Check with a tax specialist for exact details relating to your case, and there's a guide here at ht tp://ww w.ird.govt.nz/pro perty/ (remove spaces- I'm not allowed to post links?)


        • #5
          Umm the CGT in Australia is different NED - here is a link -

          Looks like you may qualify for a partial exemption


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          • #6
            Eric...as you did not live in it to start with the six year rule will not apply in the first instance.

            If you were to return to OZ and live in the property, you should get a market value at that time (does not need to be from a licenced valuer, just needs to be justifiable, so REA and keep copies of local adds etc). This will then cap the capital gain from the first instance, i.e. your gain = value at time of return - cost(s). Costs is an exercise in itself.

            If you then were to live elsewhere and the six year rule could be used as long as you do not claim another property as your PPoR.

            Edit: Note CGT is not triggered until a capital gains tax event happens. Generally this is the sale of the house. So change of use does not ordinarily trigger a CGT event.


            • #7
              Is it relevant if your a citizen or not ?, when you say you live overseas where is your primary residency?