G’day investors.
I have been thinking about taking on renovating houses full time. Then holding a few and selling a few. But a few people at work have lead me to believe that you can only sell X amount before you are classified as a property developer and get taxed sh*%loads for the privilege. Yet no-one seems to know any exact facts or figures.
Are we on the right path here?.Work smarter, not harder!.
Don’t listen to the people at work.
I think they are thinking of second hand car dealers [biggrin]
Your CGT will increase and yo need to understand what that means.
Cheers,
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985NODOC Loan – 65% Loan – No questions asked!
Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Hi Cremin
the tax laws relating to Capital gains tax means that you must own the property for 12 months if you want to claim 50% tax free (quite nice actually), if you own it for less than that time you pay capital gains on the full amount at the tax rate you will be in . For instance if you make 100k capital gains in one year and you are in the top bracket then you get taxed on the full 100k at the top rate. If however you have owned the property for 12 months then you get 1/2 of it (50K) Tax free.
regards westan
I live in New Zealand and for a fee find cash positive deals there, email me at [email protected] to join our database
I think what your friends at work are saying could have some substance. If the ATO believed you were in the business of renovating and selling for a profit then all your profit could be treated as income and the 50% exemption would not apply. A lot would depend on how many/frequently you were turning properties over.
Cheers,
Benson.
I seen an accountant about this myself when I had 6 properties and he said I could be classed as a trader with this many properties.
Westan makes a good point in that if you are selling in less than 12 months, then it makes not difference. If you are holding longer and are doing it as a ‘profession’, then you could be classed as a tradder anytime after 2 properties. You have to justify why you shouldn’t be – if audited.
I also know people doing this and claiming the PPOR CGT exemption on every property. ie buy one, live in it and do it up and sell it, and do the same thing again. The ATO could argue that they are in the business of doing this and claim tax on all their sales.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
my accountant specifically mentioned this subject only a couple of days ago. He said he knows of heaps of people putting all their deals through as CGT, however he says it is too aggressive and believes anything past your first deal is really just normal income.
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
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