Mortgage duty only applies to individuals borrowing for non property purchases (e.g. a LOC) and company loans. It would be on the date of the loan acceptance.

An individual buying property won’t be charged duty on the loan they take out to buy this property.

TFE wrote:

It was a full gift, no need to repay it

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Thats a pity as it would rule out some strategies.

You probably can redraw to buy a car but you shouldn’t as it will create a mixed purpose loan. As Corey says split the loan if you need to borrow to buy a depreciatiing asset such as a car.

The interest on the car loan may or may not be deductible depending on if it is business related.

ijc wrote:

Thnx all for your contributions. Terryw could you please elaborate on:”Cost base is $300,000 plus all costs not claimed such as stamp duty, lawyer fees, estate agent commission etc.” I would like to know exactly what costs I can claim in the cost base so I can do a calculation. Are any of the selling costs like REAgent’s fees included?

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Easier to look directly at the relevant law:
http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s110.25.html

This lists out the things you can claim.

hi Richard – Steele held her land for about 10 years from memory, and never developed it, but intended to and had undertaken activities such as applying for DAs, getting plans done etc. I think the only income she received was from agisting horses on it.

There are more cases, another one where someone claimed expenses on an off the plan property which they intended to be an investment – but they changed their minds and moved in, yet were still able to claim the expenses.

Where someone is building an investment property which they intend to rent out I don’t think there is any issue with claiming expenses before it is rented out. It is not too soon or too preliminary if they can demonstrate intention to rent it out.

e.g. Buy for $300,000
Sell for $300,000

Cost base is $300,000 plus all costs not claimed such as stamp duty, lawyer fees, estate agent commission etc.

This could be say $40,000 So you would suffer a capital loss of $40k in this example. This cannot offset income but can offset future capital gains.

Losses are applied before the 50% discount too

So $40k carried forward as a loss.

You then make $80,000 in capital gains for shares held more than 12 months

The loss is applied first so the gain will be $40k then the 50% discount making the gain $20k and this is added to your other income.

Nope cannot claim this as it is a capital cost.

MsTrump wrote:

Thanks, Terryw.

I’m looking for any information that would tell me how I could minimise land tax with my next purchase (i.e. how to structure the ownership of the next IP, and the next one, and so forth), what the future tax effects would be (e.g. how a property owned under a Trust would be different to that owned by an individual – future CGT, negative gearing, claiming losses, income rules, etc.).

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In this case you need personal advice from someone qualified to advise on land tax – a registered tax agent or a solicitor. There are no books on the topic but there are some good articles around – technical stuff for lawyers and accountants mainly.

But all you have to do is to look at the land tax act cited above.

• This reply was modified 10 years, 6 months ago by  Terryw.

What in particular do you want information on MsTrump?

If it is trusts and land tax in SA then first port of call should be to Revenue SA – the govt department responsible for administering land tax
e.g.
https://www.revenuesa.sa.gov.au/taxes-and-duties/land-tax/land-held-on-trust

Then have a look at the law
Section 13 of the Land Tax Act 1936
http://www5.austlii.edu.au/au/legis/sa/consol_act/lta193690/s13.html

tanner892 wrote:

I think you would be in trouble under strategy 1 when it comes to the main residence exemption, as it looks to me like purely being a profit making scheme.

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e.g. TD 92/135
Income tax: capital gains: is the main residence exemption relevant when the proceeds of sale of a dwelling are treated as income under ordinary concepts?
1. No. In cases where the sale of a dwelling gives rise to income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997), for example. as part of a business or from an isolated profit-making transaction, that income remains assessable even if a main residence exemption is available for CGT purposes.

2. The main residence exemption in Subdivision 118-B of the ITAA 1997 is a capital gains tax exemption only and does not extend to exempt from tax ordinary profits or business income.

Example :

A builder constructs a spec home in which he and his family reside while construction proceeds on another spec home. Any profit on sale which gives rise to income is fully assessable to the builder even if a main residence exemption is available for CGT purposes.