All Topics / Creative Investing / Tax on WRAPS

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  • Profile photo of equitykingequityking
    Member
    @equityking
    Join Date: 2004
    Post Count: 17
    September 20, 2004 - 4:56 am

    Hi guys,

    could someone please let me know their understanding on the tax implications with wraps.
    My situation is:

    I wrapped a property over 2 years ago now. Have had problems on and off over the past 12 months with the purchasers. Now we are currently going through a forclosure and taking possesion back. I was of the understanding that no capital gains or tax was due until settlement. But now that the buyers have defaulted, we’ve basically have a premiun rental being paid for the past 2 years. Is this income taxable? Is the interest we were paying then deductable?
    To make it worse I haven’t completed my personal income tax returns since the purchase. My accountant is working on it now to get all 3 returns lodged in the next week or so.

    Can anyone share a past experience on having a buyer default, then sell it normally?

    Thanks in advance

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    September 20, 2004 - 7:00 am

    I am no accountant, but would think if you have not lodged a tax return during this period and the wrap has fallen thru, then you could/should probably just treat it as a rental property – claiming interest, legal fees for eviction etc against the ‘rent’.

    Can you let us know how the eviction goes? – Good luck,

    Terryw
    Discover Home Loans
    North Sydney
    [email protected]

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

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

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