Hi All,
I am trying to get my head around CGT.
I bought 4 units(on two titles) in Oct 05 for $489,000 in Geraldton. Prices have shot up and I hope to sell one for $320,000 (I’m finding out about strata’ing to enable me to split them).my query is this:
-if I decided to use all funds to pay into the mortgage on my IPs will I still be up for CGT as its paying back into its own loan? OR will it need to be apportioned and therefore I should pay it off my own home to get rid of the non taxable debt I have?thanks for any help you can give me.
Regards
Lisaapologies for the typo, units were purchased Oct 04 not 05, therefore have been owned over 12 months.
Hello Lisa
Nice profit. Congratulations. [thumbsupanim]
You will be up for CGT no matter which loan you choose to repay. I believe all costs of stratering will be added to your cost base, apportioned per unit.
A good accountant should be able to help you to minimize CGT.
Yes, paying off non tax deductable debt is a better idea then paying off deductible debt but you might consider “paying it off” by putting it into an offset account attached to the loan rather than paying down the loan itself.
It’s the same effect but if you ever decide to move your PPOR and use the current one as an IP you will be able to take the funds out of the offset account and then the whole balance of the loan becomes deductible debt.
I’m by no means an expert in this area. In fact just the opposite. I gleaned this useful piece of information from a site that Derek gave me a link to. [smiling]
Hope this helps
ElkaAnother tip prior to selling would be to do and maintainance or improvement for the whole block prior to sale. A new carport or air conditioner per unit would add to your sale price and the cost of the imporovement can only be ofset against capital gains so you maximise your deductions before paying tax. As you would do all 4 at once you would also get a price reduction on the work on the other three properties. This is maximising your buying power while you still have 4.
Again, well done on the profit.
DD
Buyers Agent (Dip Financial Services(FP)
Don’t sweat the small stuff,and it’s all small stuff!!
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