Hi all !
My wife and I purchased a property 4 months ago for a price of 132k . We have now currently spent 20k on revamping the property and are considering on either renting it out for a sum of $220 per week . Out of curiousity we decided to call upon a real estate to give a current value of the property . He came back with a figure of up to 250k no problem . Our only concern is that if we sell the property now or within the next 6 months how will this affect the capital gains ????Assuming you never lived in this property you will be up for CGT on the profit you made after buying, selling and reno costs are taken into account.
If you hold the place for more than 12 months the CGT is halved.
If you have occupied it as your home you may be exempt from paying CGT – see your accountant for more detail.
Cheers,
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
hi inverstor
doing some figures it looks like you would have CG of say 80k after costs. As mortgage hunter said if you don’t own the property for more that 12 months you pay CGT on the full amount. if you are on a high salary you would pay nearly half that in Tax.[xx(]
if you wait, even if you are in the highest tax bracket you will still pay 25% Tax[
] So if you wait 6 months you could save up to $20,000.
Investor your experience highlights how important it is to consider what stuctures we use to invest in. If for example you have it in a trust you can distribute the CG to whoever is paying the lowest tax that year. Sorry it doesn’t help you now but it will help others.
Another dilema for you is. Do you rent it out for only 6 months then the property is no longer brand new looking (as i assume it is now after your reno)[?]
if you choise to rent it out then another consideration is what will the price be in ten yrs, going on history it could be double the price. Why do you want to sell? is it because you are worried the market will drop? or is it because you want the money for more investments. if the latter is the case then why not refinance, you get you hands on some of the profits and pay no tax.
Sorry i’ve probably raised more question for you.it a difficult decision but hey well done[
] you just made heaps of $$$ reasonably easily[]regards westan
Thanks Weston for those words of wisdom , we were also considering the aspect of the refinancing as well though with the extra costs with the additional money to repay was weighing us down . And in reply to the reason for the sale , is because we are looking to purchase our third property .[
]
hi inverstordoing some figures it looks like you would have CG of say 80k after costs. As mortgage hunter said if you don’t own the property for more that 12 months you pay CGT on the full amount. if you are on a high salary you would pay nearly half that in Tax.[xx(]
if you wait, even if you are in the highest tax bracket you will still pay 25% Tax[] So if you wait 6 months you could save up to $20,000.
Investor your experience highlights how important it is to consider what stuctures we use to invest in. If for example you have it in a trust you can distribute the CG to whoever is paying the lowest tax that year. Sorry it doesn’t help you now but it will help others.
Another dilema for you is. Do you rent it out for only 6 months then the property is no longer brand new looking (as i assume it is now after your reno)[?]
if you choise to rent it out then another consideration is what will the price be in ten yrs, going on history it could be double the price. Why do you want to sell? is it because you are worried the market will drop? or is it because you want the money for more investments. if the latter is the case then why not refinance, you get you hands on some of the profits and pay no tax.
Sorry i’ve probably raised more question for you.it a difficult decision but hey well done[
] you just made heaps of $$$ reasonably easily[]regards westan
Hey investor
Unless the extra costs for interest when refinancing kill your servicability, you could always borrow all that you can, and put aside, say, $10K to use to cover any interest payments or costs etc.
That would be what I would do.
Cheers
MelHi Investor
Just a word of warning on the CGT.
It is calculated from Contract to Contract date rather than settlement date and is not 12 months but 12 months and 1 days to be on the safe side.Cheers Richard
[email protected]
http://www.fhog.com.auThere is no such thing as a problem.
Just a solution waiting to be foundRichard Taylor | Australia's leading private lender
I’ve followed these messages with great interest. As i said on another posting, I’m new to Australia and just getting started in WA. Can anyone recommend a good property accountant in Perth who can help with these tax and structure issues?
Many thanks
hi all
great point Richard, about when CGT is calculated. i nearly got into trouble on that one earlier this year. I didn’t know about it till recently. You hardly ever hear it mentioned and it goes aggainst what i had always assumed that it was settlement date.
regards westan
Westan
The other point is the 1 Year and 1 day rule.
Might seem petty but I assure you the ATO will not think so. Most people believe they only need hold the proprety for a year and we have seen to many sales end in tears that way.
Cheers Richard
[email protected]
http://www.fhog.com.auThere is no such thing as a problem.
Just a solution waiting to be foundRichard Taylor | Australia's leading private lender
] So if you wait 6 months you could save up to $20,000.
] you just made heaps of $$$ reasonably easily[
]
]
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