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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 the founder of Money and serves as the publication's editorial adviser. One of Australia's most trusted personal finance experts, Paul has spent decades helping Australians build wealth, manage debt and make smarter money decisions. He is widely known for host­ing the Money TV program and authoring best-selling personal finance books. Since launching Money in 1999, he has played a leading role in delivering practical, independent financial guidance to Australians. Paul is chair of InvestSMART Financial Services. He was the founding chair of Ecstra Foundation, a national not-for-profit focused on improving financial wellbeing, from 2018 to 2026, and led the Australian Government's Financial Literacy Board and Financial Literacy Australia from 2004 to 2019. In academia, Paul is chair in financial literacy at Macquarie University, where he is also a Professor in the School of Business and Economics. Ask Paul your money question. Due to volume, Paul cannot respond to questions posted in the comments section.
Comments
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?