Ask Paul: Our son lived in his house then rented it out, does he owe CGT?


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Paul, our son is a missionary in Kenya. He and the bank have had an Australian home together for about 17 years - he lived in the home for 11 to 12 years.

He is now back in Australia and has complied with tax rules while in Kenya.

However, if he ever sells his home will he have to pay capital gains tax? Or is there any way he can be exempt? Hope you can help. - Maryke

paul clitheroe

We can put the pandemic aside for a moment with a CGT issue, but one thing I am sure about, Maryke, is that you would be pleased to have your son back in Australia.

I strongly suggest your son goes straight to his accountant to check out the "six-year rule".

You can maintain your family home status if you are away from it for up to six years.

Equally, at worst CGT should be pro rata for the proportion of time he has lived there.

But it sounds as if it may be around that six year mark now. He really needs personal advice ASAP.

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Paul Clitheroe AM is founder and editorial adviser of Money magazine. He is one of Australia's leading financial voices, responsible for bringing financial insight to Australians through personal finance books, the Money TV show, and this publication, which he established in 1999. Paul is the chair of the Australian Government Financial Literacy Board and is chairman of InvestSMART Financial Services. He is the chair of Financial Literacy at Macquarie University where he is also a Professor with the School of Business and Economics. Click here to ask Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section. Please view our disclaimer here.
Evangelina Rizardo
May 21, 2020 5.14am

I got two properties I'm selling my primary residence then use my second home as my primary residence if I sold it will I pay capital gains tax on my second home?

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