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bkb1956
bkb1956, Finance Enthusiast
Category: Finance
Satisfied Customers: 3219
Experience:  IRS Enrolled Agent, 18+ years of experience in tax preparation with associated finance experience.
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Bought a house in Adelaide in 1998 which we rented to sons

Customer Question

bought a house in Adelaide in 1998 which we rented to sons while they were at Uni, retired in 2004 and moved into house, spouse died in 2005, sold house in 2011. this was the only house owned by us, therefore our principal residence, we rented a house in Whyalla until retirement. When sold I had to pay Capital gains tax. Was this correct having to pay on the sale of principal residence?
JA: The Accountant will know how to help. Is there anything else important you think the Accountant should know?
Customer: not at this stage, thank you. Coral Smith
Submitted: 7 months ago.
Category: Finance
Expert:  bkb1956 replied 7 months ago.

Welcome to Just Answer. My name is ***** ***** I will be happy to assist you.

Per ATO,

"You can generally claim the main residence exemption from CGT for your home. To get the exemption, the property must have a dwelling on it and you must have lived in it. You're not entitled to the exemption for a vacant block.

Generally, a dwelling is considered to be your main residence if:

  • you and your family live in it
  • your personal belongings are in it
  • it is the address your mail is delivered to
  • it is your address on the electoral roll, and
  • services such as phone, gas and power are connected.

The main residence exemption is not based on one factor alone, and the weight given to each varies depending on individual circumstances. The length of time you stay there and your intention in occupying it may also be relevant."

If you do not qualify for the full exemption,

You may be eligible for a partial main residence exemption if:

  • the dwelling was your main residence for only part of the period you owned it
  • your partner or dependants have separate homes
  • you've used part of the property (either the dwelling or the land) to produce assessable income, or
  • the land is more than two hectares.

If you're eligible for partial exemption, part of the capital gain or capital loss you make is ignored for tax purposes.

https://www.ato.gov.au/General/capital-gains-tax/your-home-and-other-real-estate/selling-your-home/

The following link contains information regarding amending your tax assessment:

https://www.ato.gov.au/General/Correct-a-mistake-or-amend-a-return/Correct-(amend)-an-income-tax-return/Time-limits-on-income-tax-amendments/

Please let me know if I can assist you further.

Thank you and best regards,

Barb

Expert:  bkb1956 replied 7 months ago.

Just following up with you to see if you have any other questions or concerns. If so, please let me know so I can further assist you.

Best regards,

Barb

Customer: replied 6 months ago.
thank you for your reply to my query. I have been having internet problems, hence the delay.
As we were renting in Whyalla our mail and electoral address was there but our sons lived in the house and we went there frequently and the house was furnished with our goods furniture and personal.
I was dismayed when I had to pay the CGT but didn't know any different. Is it too late to look into it again? Are the rules the same in SA as in TAS? Perhaps I could phone you on Monday.
Regards Coral
Expert:  bkb1956 replied 6 months ago.

As I mentioned, you may qualify for a partial exemption of the CGT.

I also included information regarding amending your tax assessment. You can amend your tax assessment for a tax year ending in the previous 10 years.

Best regards,

Barb

Customer: replied 6 months ago.
Thanks for your email. It is difficult to know what to do. Do you recommend that I contact the accountant in SA who did tahe work out for the CGT.
Expert:  bkb1956 replied 6 months ago.

Yes.

He will be able to assist you with amending your tax assessment.

Best regards,

Barb

Customer: replied 6 months ago.
had second thoughts about contacting accountant who did the assessment, It would be awkward as I am questioning their expertise. Is there any other recourse available? Would I have to have all the original paperwork, as I do not seem to have it?
Coral
Expert:  bkb1956 replied 6 months ago.

You would need to find out what the accountant did for the initial assessment in order to know how to proceed now. Perhaps you could approach it from the perspective of asking how they handled it at the time. You would need your paperwork so you have the documentation to amend your assessment.

Please take a moment to rate my answers since that is the only way I receive credit for answering you.

Best regards,

Barb