Sell IP or continue to lease out

LPeanutButta on 11/06/2020 - 15:21

We have a 2 bedder unit purchased in 2011. Its in a block of 6 on the Syd nth beaches. The block was built in the 1960s.

We moved out in 2015 and have been renting it for the last 5 years.

Our tenants are moving out in the next few weeks.

We were planning to sell in September so we can claim the full cgt exemption for Ppor. Then covid happened.

What would you do? Would you sell now or rent it again whilst waiting for the market to improve and pay cgt?

We are renting elsewhere and have 2 young children and 3 cats (!) so don't want to move back into the unit if we can avoid it.

We are both working so can afford repayments.

We wanted to sell and use the money as a deposit to buy a house to live in

Home & Garden

Comments

  • TheMindsetTraveller on 11/06/2020 - 15:37
    +2

    "move" back in so you can renew the 6 year PPoR exemption - change all of your mailing details to that proprety including utilites for six months - leave it vacant, then re-lease it after 6 months. to prove you are 'staying' there - you have utilities to prove it - also get a mobile phone, download the Covid19 tracking app, turn on phone and leave inside the house pemannently plugged into the wall.

    • Tee Rex Arms on 11/06/2020 - 15:40

      Lol and if someone even bothered to track the movements of the phone it wouldn’t be suss at all that it never moved from the same spot…

      • TheMindsetTraveller on 11/06/2020 - 15:41

        thanks for the neg,

        delete the phone part, that was being idiotic

        your utilities is generally enough to prove residency, change your driver licenses etc

    • chobani4lyf on 11/06/2020 - 16:59

      What I would do also

    • Ghost47 on 11/06/2020 - 17:21
      +1

      Nice lack of integrity there.

      • brendanm on 11/06/2020 - 21:48

        God forbid the government doesn't take their massive cut of ops profits for doing absolutely nothing.

    • John Kimble on 11/06/2020 - 18:15

      The covid app doesn't track location

  • Meho2026 on 11/06/2020 - 15:58

    I say sell tax free if you are going to buy another PPR in the same market.

  • garetz on 11/06/2020 - 17:09

    cgt exemption is probably a lot more money in your pocket than a possible rising market in the future.

  • enigma48 on 11/06/2020 - 18:02

    I was looking into this a while back and had that same "oh no, 6 year mark" CGT concern.

    I'm not an expert, but it's not as bad as it sounds. It's like asking if earning overtime is worth it because the tax rate is higher - it sounds bad (higher tax rate!) but in this case it only applies (I believe) to year 7+. So:

    Bought 2015/1/1: $200k
    Value@ 2021/1/1: $300k
    Value@ 2022/1/1: $330k

    200-300k is during the PPOR, no tax. CGT on the non-PPOR part would be calculated on $30k only at let's say 30%, so $9k. So $9k tax on $130k increase.

    If it's purely financial, I don't think anyone's predicting a real estate rise this year so maybe get it valued around now (before prices drop much) and hold off.

    It sounds like there are other considerations (buying your own place), it's hard to put a value on that but try. But also consider anything loss in capital you'd lose on selling your place, you'd likely save on the place you buy (assuming all things are equal).

    • Mentallysick on 12/06/2020 - 08:26

      Why CGT only on 30K? Since it is more than 6 yrs, Doesnot he has to pay now CGT on 130K? and i also assume that he will get 50% discount as own more than a year.

      • enigma48 on 12/06/2020 - 08:30

        It was their PPOR for the first 6 years (attracts no CGT), it's only the 7th where it wasn't (and attracts CGT). And I forgot about the 50% discount, thanks for adding that.

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