All Topics / Legal & Accounting / Capital Gains Tax

Viewing 6 posts - 1 through 6 (of 6 total)
  • Profile photo of CornelBassonCornelBasson
    Participant
    @cornelbasson
    Join Date: 2003
    Post Count: 62

    Hello Everyone

    I am about to rent my first IP out in the next 2 weeks, My question is do I keep that as my primary place of residence or do I change it to the place I will be renting. Also I want to get all my equity out of this unit and stick it in the bank about 70k, I have only had the place for 5 months will I get charged cgt on the equity I take out….what is the best way of going about this?

    Thanks team

    Profile photo of Jas_2Jas_2
    Member
    @jas_2
    Join Date: 2001
    Post Count: 9

    easiest way is to work out what you need for non-income purposes and get two loans (one fore around 13K, and the other for the rest). that way accounting at the end of hte year is simple.

    Jas


    Why do companies offer you “free gifts?” Since when has a gift NOT been free?

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,190

    Cornel

    Since you have been living in your property, you could probably continue to class it as your main residence even tho you are living elsewhere. you can do this for 6 years as long as you do not class any other property as you main residence at the same time.

    You could withdraw equity form you property and put it in the bank, but why? You would be lossing out as you will be charged around 7% interest, but will only be getting around 5%. You may be better off to leave it there until you need it. maybe set up a redraw facitlity now to get it all ready. You may also not be able to claim the extra interest on this as a tax deduction-depending on what it is eventually used for.

    You will not be charged any tax on the equity that you borrow because it is not income, just borrowings.

    Terryw
    Discover Home Loans
    North Sydney
    [email protected]

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of CornelBassonCornelBasson
    Participant
    @cornelbasson
    Join Date: 2003
    Post Count: 62

    Hi

    I want to use my equity to pay my car out and wipe a credit card…but that’s only about 13k that I will need…..so maybe I just need to take out a bit. What about refinancing my loan once the place becomes a investment property. I have a fixed rate at the moment for one year till Sep this year. Can I change the loan to a investment loan or do I have to wait till the one year is up.

    What will be the best way to structure this so I don’t get hit with a huge tax bill.

    Thanks

    Profile photo of Still in SchoolStill in School
    Member
    @still-in-school
    Join Date: 2003
    Post Count: 1,844

    Hey Cornel,

    Can you get on msn, ill chat to you there? Sorry about last night was asleep.

    Cheers,
    sis

    People 4get that by saving just $3 a day & investing it sensibly
    over a working life, you’ll end up with around $1 million

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,190

    Cornel

    You can use the money to pay for those (or anything), but the interest on this portion won’t be claimable. It doesn’t matter when you take the money out as the ATO goes on the purpose of the money. You can still do it tho, just don’t claim it.

    Terryw
    Discover Home Loans
    North Sydney
    [email protected]

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

Viewing 6 posts - 1 through 6 (of 6 total)

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