What are the Capital Gains Tax implications from my property which I have rented out from overseas?

Q.

I have a property in Melbourne that I bought in 1994. I rented it out for the first three years and moved in after 1998 for 11 years as my principal residence. I have now moved overseas and rented out the property again last year. If I sell it now, do I need to pay capital gains tax? I am not sure if I will move back to Melbourne after six years. Will the six year rule apply to my case that I don't need to pay the CGT if I decide to sell at that time?b

A.

This is a fairly complex issue so make sure you take advice before you sign any contracts. Basically you are liable for capital gains tax for the first three years and this will be calculated on a pro rata basis according to the total time you own the property. If you occupy the property, and then move out, and don't have any other principal place of residence you are entitled to the six year rule. As the property was purchased after 20th August 1991 the cost base can be increase by all the costs while you are living there (section 110-25(4))