The May 2018 issue of real estate magazine, Your Investment Property, featured industry experts including Janelle Bartlett of Chan & Naylor Redlands.
The issue covered strategies on how to keep your property safe from fire, theft and tenant damage, the big risk and big returns of commercial property investing, how to live off $800 per week positive cash flow and answers to some of your burning property questions.
A reader asked Janelle about circumstances that prohibited her living in her residence because of having a child with significant disabilities. The reader was not able to work full-time for over 15 years now so she could not pay the mortgage herself. She rented in a more affordable location which was closer to her part-time workplace and did not have any other property considered as her main residence. Her property was purchased in November of 1998 but she moved out in March 2000. The reader asked if she could claim for CGT exemption.
Janelle said that the reader should consider setting up a Special Disability Trust (SDT) for the benefit of her severely disabled child since special rules apply to the income from these trusts. Special Centrelink gifting concessions apply in that gifts worth $500,000 or less by a family member to an SDT are exempt from Centrelink gifting rules, assisting the reader to qualify for carers’ income support. Assets that are held in the trust are not assessable under the Centrelink assets test. These assets may also qualify for a capital gains tax exemption under ITAA 1997 so the reader may want to transfer her investment property to an SDT. SDT may require a special tax return though, payable on unexpected income of the trust.
Remember that CGT main residence exemption is often calculated based on the number of eligible exempt days as a proportion of total days held. The reader must establish the property as her main residence as soon as practicable because if delayed, she may not be entitled to count the days prior to her move-in as eligible exempt days but instead, be entitled to partial main residence CGT exemption. Under ITAA, she can treat the property as her main residence for up to six years if it is used to produce assessable income.
If you would like to know more about tax exemptions, you can click here to know more about Chan & Naylor services. You can leave your details here and we can schedule you for a free consultation. We’ll contact you to explain more.
Whether you are a beginner, seasoned investor or business owner, our property and business tax accountants can give you guidance to maximise the financial areas of your life. We can also give you an integrated and tailored solution for your superannuation, taxation, property investment, asset protection, estate planning and more.
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