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As long as you have owned & lived in the property as your primary residence for 2 out of the previous 5 years ending on the date of sale, you will qualify for the 250,000 single/500,000 married capital gain exclusion on the sale of your primary residence. In your case, you will have to pay capital gains tax on the depreciation you claimed or should have claimed during the period you rented the property.
If you didn't claim depreciation, you still have to make that adjustment as depreciation is what is called "allowed or allowable".
You would have figured the depreciation by allocating your purchase price between land & building (land isn't subject to depreciation), and then you would have divided the building cost by 27.5 years & that would have been the correct depreciation for that year that you rented the property. So, for example if you paid 375,000. for the property & allocated $100,000. to the land & 275,000. to the building, the depreciation for the year would have been $1,000. & the capital gains tax on that would most likely be $200., so this isn't a big deal.
Yes, your are absolutely correct, except that I am on Cape Cod in Massachusetts (the JustAnswer.com site is based near SanFrancisco, CA). Your question was put in the general Capital Gains Category instead of in Australia & I didn't see that indicated (I missed it); so I'll see if I can transfer it over to the correct category; it's a common question here :]..............................Steve G.
My name is ***** ***** I am a NSW Solicitor. Thank you for your question, and will do my best to assist you with your question. Please understand this is not legal advise Please understand this is not legal advice but a guide to assist you.
If it is your principal place of residence there is no Capital Gains Tax in Australia as it is exempt.
You can rent out your principal place of residence for a short period of time and you can have 2 principal places of residence for a period of 6 years.
You have nothing to worry about. I hope this makes sense and is of assistance. if there is nothing further
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