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  1. #1
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    Default Accountants help please...

    Just wondering if anyone has any understanding of the "6 year rule" regarding capital gains tax in Victoria?

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    with respect to rental properties and main residence exemption?

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    Yes I think so, we are selling a rental that was our primary residence until March 2010 and have just been told we may be exempt of CGT due to the 6 year rule

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    as long as the rental period doesn't exceed 6 years then you should be right.

    eg: buy and live in it as main residence, then rent it out (must be less than 6 years), then live in it again. you can do this over and over again so long as the period for which it is income producing doesn't exceed 6 years.

    if you satisfy that criteria, the entire sale is cgt free on the basis that you satisfy the main residence exemption.

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    babyla  (18-11-2015)

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    Quote Originally Posted by turquoisecoast View Post
    as long as the rental period doesn't exceed 6 years then you should be right.

    eg: buy and live in it as main residence, then rent it out (must be less than 6 years), then live in it again. you can do this over and over again so long as the period for which it is income producing doesn't exceed 6 years.

    if you satisfy that criteria, the entire sale is cgt free on the basis that you satisfy the main residence exemption.
    Thanks. How long do you have to live in it again? And what constitutes living in it?

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    I can't remember how long you need to live in it for. from memory I don't think there's a set amount of time, the ATO bases it on fact. what constitutes living in it is things like: does your mail go there, is it your home address on the electoral roll and in your tax return, utilities etc all signed up in your name at the property etc. all the usual stuff you'd expect to see someone do with their usual home. I think they base it on those things, rather than giving a period of time. I think a period of time is easier to fudge than the other stuff I outlined, hence they look at the facts first.

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    babyla  (18-11-2015)

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    Quote Originally Posted by turquoisecoast View Post
    I can't remember how long you need to live in it for. from memory I don't think there's a set amount of time, the ATO bases it on fact. what constitutes living in it is things like: does your mail go there, is it your home address on the electoral roll and in your tax return, utilities etc all signed up in your name at the property etc. all the usual stuff you'd expect to see someone do with their usual home. I think they base it on those things, rather than giving a period of time. I think a period of time is easier to fudge than the other stuff I outlined, hence they look at the facts first.
    Great. Thanks very much for your help!

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    turquoisecoast  (18-11-2015)

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    Quote Originally Posted by turquoisecoast View Post
    as long as the rental period doesn't exceed 6 years then you should be right.

    eg: buy and live in it as main residence, then rent it out (must be less than 6 years), then live in it again. you can do this over and over again so long as the period for which it is income producing doesn't exceed 6 years.

    if you satisfy that criteria, the entire sale is cgt free on the basis that you satisfy the main residence exemption.
    Not an accountant, but i don't think you need to live in it again. Just sell it within 6 years of moving out and starting to earn income from it? Must have been your primary residence first tho, as PP said, and u can't count anywhere else as your primary residence at the same time. Like PP said, i think moving back in does reset the clock though.

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    babyla  (19-11-2015)

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    Ps your state is irrelevant re CGT questions ☺

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    babyla  (19-11-2015)

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    Oh and i think there are also complicated things about you and your DP, if you have one, not being allowed to have different main residences to avoid CGT? I think this was to avoid rich couples being exempt frim CGT when one claimed to live in the city house and the other in the beach house ☺ Talk to your accountant if you have or do own a second property.

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