Are we entitled to CGT exemption?

Q.

Can you please clarify the rules governing capital gains tax exemption? We have had an investment property for 10 years and have never lived in it. We are now thinking of moving into that home. We have not decided yet whether to rent or sell our current place of residence. After two years if we decide to move out of the investment property are we entitled to CGT exemption if we sell it?

If you move into the investment property, you will be liable for CGT on a pro rata basis. Therefore if you own it for a total of 12 years during which time it is rented out for 10 years, you will be liable for CGT on ten twelfths of the gain. You will also be entitled to a 50 percent discount as you owned it for more than 12 months.