Re: CGT -- Cox Business Accountants

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Date Posted: Friday, November 22, 08:17:23am
Author: Jason Ginns
Subject: Re: CGT
In reply to: Elizabeth 's message, "CGT" on Thursday, November 21, 09:30:52am

Owner occupied residences are classified as "main residences" by the Australian Taxation Office (ATO).

For Capital Gains Tax (CGT) purposes main residences are exempt from CGT.

A family can usually only have one main residence at the one time. If there is more than one residence owned by a family, and they have lived in both the residence at some point in time, then depending on the circumstances they can choose which house they want to specify as their main residence.

In your scenario above the sale of the old property could be CGT free. However this would only be the case if the family declared the old house was their main residence since moving into the new house.

If they decide to follow this course, then the new house could have some CGT on it's sale further down the track. This is because for a period of time it is not the main residence of the family.

If the opposite occurs, and the new house is declared to be their main residence since moving into it, then there could be CGT on the sale of the old property.

It is a fairly complicated area, and the correct scenario to follow will vary from case to case.

I would advise you to sit down with an accountant to help you calculate the best path to follow, and to also explain the above matters in greater detail.

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