{"id":3430,"date":"2015-02-19T01:00:33","date_gmt":"2015-02-18T14:00:33","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=3430"},"modified":"2015-02-19T01:00:33","modified_gmt":"2015-02-18T14:00:33","slug":"cgt-answered","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/cgt-answered\/","title":{"rendered":"Capital Gains Tax questions answered"},"content":{"rendered":"<p>&nbsp;<br \/>\n<strong>In today&#8217;s show Ken Raiss<\/strong>\u00a0responds to Victor\u2019s question about Capital Gains Tax and when it is applied if he wants to rent out his principal place of residence and then move back before he sells it.<\/p>\n<h4>Transcript<\/h4>\n<p><b>Kevin<\/b>:\u00a0 In today\u2019s show, we\u2019re going to answer a couple of questions from listeners. Thanks for sending them in. Just send them in anytime through the website. Even if we don\u2019t answer them in the show, we will always get an answer for you.<br \/>\nVictor wrote to us and said, \u201cI moved out of my principal place of residence, which I\u2019ve been in for seven years, and then rented it out for three years. I plan to sell it. Do I have to pay capital gains tax? Do I need to move back in to sell it so I can get some exemption? The main reason I want to sell it is to avoid capital gains tax and minimize my yearly land tax. I plan to put some of the money into my self-funded superannuation fund so I can buy under that scheme.\u201d<br \/>\nA number of questions in there, but I\u2019m going to refer them all now to Ken Raiss from Chan &amp; Naylor.<br \/>\n<b>Ken<\/b>:\u00a0 In summary, you can retain your main residence exemption for up to six years once you move out unless, of course, you\u2019ve identified another property as your main residence. You can only have one residence for tax exemption at a time.<br \/>\nThe beauty of it is you don\u2019t have to identify which residence until you sell one. Then you do the numbers and you work out which property gives you the best tax advantage. The ATO in this regard is pretty good at it.<br \/>\nTo calculate the tax, what we need to do is go back and determine the market value of the property at the time you moved out. That sets up, if you like, the cost base to determine the profit on the sale. You get the selling price less any costs, of course, and you compare it back to the market value on the date you moved out and rented the property. That creates the profit that we then look at to see how much is taxable.<br \/>\nThe way we calculate what\u2019s taxable is we look at the number of days you\u2019ve owned it in total and you compare that to the number of days you had a tenant in there, while taking into account up to six years, you can have it as tax-free. So it\u2019s a proportion of the number of days you had a tenant versus the number of days you owned it, but you only multiply that against the profit based on the market value at the time you sold.<br \/>\n<b>Kevin<\/b>:\u00a0 In Victor\u2019s case, because he\u2019s only been renting it out for three years, it\u2019s not going to apply to him, is it?<br \/>\n<b>Ken<\/b>:\u00a0 Correct, but there will be a small amount of tax involved. There is still a 50% reduction on the tax because you\u2019ve had that more than 12 months, and you actually can put part of that profit into super. Super is taxed at 15% compared to Victor\u2019s maybe higher marginal tax rate.<br \/>\nBut if you\u2019re an employee, you can only put that money into super via a<b> <\/b>salary sacrifice, and the only way you can do a salary sacrifice is by advising your employer before you\u2019ve earned the money. You can\u2019t call in on June 30<sup>th<\/sup> and say, \u201cLast month\u2019s money that I haven\u2019t received yet, I want to salary sacrifice that.\u201d You have to salary sacrifice <i>prior<\/i> to earning the income.<br \/>\nIf you\u2019re self-employed, obviously that doesn\u2019t come into the equation.<br \/>\n<b>Kevin<\/b>:\u00a0 There you go, Victor. That\u2019s answered your question. Ken Raiss, of course, is from Chan &amp; Naylor. Thanks for your time, Ken.<br \/>\n<b>Ken<\/b>:\u00a0 Thank you, and I hope that satisfies Victor.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>&nbsp; In today&#8217;s show Ken Raiss\u00a0responds to Victor\u2019s question about Capital Gains Tax and when it is applied if he wants to rent out his principal place of residence and then move back before he sells it. Transcript Kevin:\u00a0 In today\u2019s show, we\u2019re going to&#8230;<\/p>\n","protected":false},"author":176692471,"featured_media":1710,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[10,25],"tags":[101],"class_list":["post-3430","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-kevin-turner-sponsored-channels","category-sponsored-channels","tag-podcast"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.2 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Capital Gains Tax questions answered - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/cgt-answered\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Capital Gains Tax questions answered - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"&nbsp; In today&#8217;s show Ken Raiss\u00a0responds to Victor\u2019s question about Capital Gains Tax and when it is applied if he wants to rent out his principal place of residence and then move back before he sells it. 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