QUESTION:
We have two properties - one is our main house the other is a rental. We want to move into the rental. To minimise capital gains tax do we sell the main and move to the rental - or do we move to rental and rent out the main?
ANSWER:
If you sell your home after you move out it should be free of capital gains tax but if you rent it out you will be liable for CGT on any increase in value from the date it was rented out. When you move into the rental it will become your principal place of residence and CGT when sold will be apportioned on a time basis. Therefore, the longer you occupy that property the less your CGT will be.
