Just imagine... It's the morning of Christmas Eve, you've been flat out the past week and then the phone rings...It's the electricity company. When will you pay your overdue bill?The phone rings again. It's Aunt Betty. What should she bring for Christmas lunch?The phone keeps ringing. This time, it's the RSL Art Union's General Manager and you've won Australia's biggest home lottery (like Trevor)!
It's time to pop the (expensive) champagne and celebrate your home lottery win with family and friends. Now that you're a property multimillionaire, it's also time to review your options. The possibilities are very exciting!
Option #1 - Sell your Prize Home
You should choose this option if you don't want to move into your new prize home and would prefer to receive a one-time cash payment instead of a regular rental income stream. You can sell your prize home completely tax-free, to the value of your prize home on the date that you won it. If you sell your prize home for more than it's valuation on the date that you won the prize home, you will generally need to pay capital gains tax (CGT) on any increase (that is, the difference between the valuation price on the date that you won your prize home and the sale price of your prize home). If you keep your prize home for over 12 months, you may be eligible for a 50% discount on any CGT.
Option #2 - Rent your Prize Home
The RSL Art Union estimates an annual rental income of $177,320, and peak holiday rental of $16,150 per week, for the 7 Gold Coast apartments, including luxury 3-bedroom penthouse, which are part of Golden Treasure Draw 311. You should choose this option if you don't want to move into your new prize home and would prefer a significant, regular rental income stream! You will need to pay tax on your rental income. In addition, and as with any rental property, you will need to pay the council rates, insurance, maintenance and other related costs for your rental properties.
Option #3 - Live in your Prize Home
If your only other asset is the house you live in, you may be able to sell your current home tax-free and then live in your new prize home.