"Hi I work for a Debt Agreement administrator. There are 3 ways to end a debt agreement, you pay it out in full, you can apply to have the agreement terminated (however interest backdates from the start of your agreement), or you can offer to make a…"
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Principle residence and capital gains - continue renting or sell?
We'd love any advice or opinions on the following;
We've got 3 properties (2 investment properties and 1 principle residence). We lived in our principle residence for 2 years and have been renting it out for the past 5.5 years, the property is vacant and we have no morgage on this property. The property is not worth much (We brought it for 170,000 and we could sell it for 360,000). We brought a property for 600,000 and have a morgage for 580,000, we brought the property for the land potential (not the house). We currently rent this house out for $300pw. We are wondering if we should sell our principle residence and use this money to reduce this loan or continue renting the principle residence. However, renting the principle residence past 6 years means paying capital gains tax when we sell. We eventually want the property we brought for 600,000 to be our principle residence and plan to knock the existing house down and build in the future. Any thoughts or advice would be appreciated.
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Replies to This Discussion
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Permalink Reply by jrc on -
Hi, I've just joined up so hadn't seen your question before. Assuming you moved into your PPOR as soon as possible after settlement, and that you haven't claimed another PPOR since, then if you sell within 6 years of moving out there is no Capital Gains Tax.
If you have had another PPOR then you should get your first one valued at the date it started receiving income as the cost base is reset at that time. This might reduce your CGT anyway if you are unable to claim the full exemption.
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