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Complicated living arrangements and your tax

I am living in my old home, which we intended to sell after building a new home but for a number of reasons we had to keep the new home and rent it out. We moved into the new home for a short time while we tried to sell the old one and I was talking to an accountant who said I could have a complex capital gains tax issue. This all happened three years ago and I am now planning to sell the old house. What do you think?

My best advice is to get an accountant or a financial planner who’s an expert on property to go through this very complex story. Essentially, your old home should be free of capital gains tax as it was your principal residence but then you moved out for a while. If you rented it, then you have created a new issue.

That said, if you had one home only and you went overseas for five years and rented it, you could avoid capital gains tax as you do have six years’ grace before capital gains tax kicks in provided it’s your only residence.

If you have one home you live in and you buy an investment property, then you’re up for capital gain from year one. Also, as you have built a home that you will sell, you’re like a developer and could be hit with GST.

But before you panic, there are a number of ways the tax cat can be skinned so go looking for an expert on tax and property to get an official opinion.

For advice you can trust book a complimentary first appointment with Switzer Financial Services today.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Published on: Monday, June 07, 2010

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