The January 2018 issue of the popular real estate magazine, Your Investment Property, featured industry experts, including Lilian Fisher of Chan & Naylor Perth.
The magazine had its annual top 100 suburbs guide and talked about Budget Reno Results ($74K Spend, $90K Value-Added), how investing in your 40s is never too late and why house prices won’t fall.
A reader asked Lilian about a valuation for a property’s capital gains tax. “ A valuation on a property is only required when you are renting out a main residence for the first time,” said Lilian. “At that time, the valuation of a previous main residence will become the cost base for CGT purposes.”
Lilian said that all costs on improving a property and any repairs not claimed as rental property deductions or holding costs while being a principal place of residence will be added to the original cost base when calculating the capital gain on sale of the property. “You investment property will always be subject to capital gains on a pro rata basis as it was never established as a main residence in the first instance when acquired.”
She also advised the reader that they can continue to claim the old PPOR as a main residence for up to six years after they move out. Classifying a property as a holiday home will not remove their obligation to pay CGT as only one main residence can be claimed at any one time.
So remember: a valuation is only required the first time a main residence is leased out and only one property at a time can be claimed as a main residence. The upgrading costs of a property is added to the cost base when it is sold. See the full article below.
If you would like to know more about property taxes and investment, 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 of your superannuation, taxation, property investment, asset protection, estate planning and more.
Chan & Naylor Group has nationwide offices in Brisbane and Capalaba in Queensland, Melbourne and Moonee Ponds in Victoria, East Perth in Western Australia, and South West Sydney, Parramatta, Pymble, North Sydney, and Sydney in New South Wales.