Question

1 July 2007: Troy purchased a Melbourne house for $300,000 and occupied it with his family.

1 July 2011: Troy was relocated to Sydney and he purchased and occupied a house there as his main residence. The Melbourne house was leased to tenants.

30 June 2017: He sold the Melbourne house for $500,000.

What is his capital gain (before discount) if he does not elect to treat the Melbourne dwelling as his main residence during his absence?

Group of answer choices

$80,000

Nil

$120,000

$200,000

Answer 1

Answer:

Capital Gain = $200,000

Explanation:

Capital gain = $500,000 - $300,000 = $200,000

Troy has sold the property on 30 June 2017. So he would not be eligible to get benefited under special six years rule, which means that a property that was previously your PPOR ( Principal place of residence) can continue to be exempt from CGT if sold within six years of first being rented out.

The exemption is only available where no other property is nominated as your main residence. Troy is not eligible to get the benefit of six-years rule as he has other property at Sydney.