Hope someone can shed some light for me. Currently in process of selling investment property, in which I will be pushed well into highest tax bracket. How is it that people say you can pay only 30% tax on the CG?
30% represent the current Tax Rate for a Pty Ltd Company and therefore if held in this type of entity would be the rate payable.
Alternatively dependant on your personal income it could be that your marginal rate of tax is 30%.
If you are in the highest marginal tax bracket then you will pay 48.5% on the gain.
Do you have to accept the contract? Are you able to defer the sale until a year when your income will be at a lower rate. Do you have to sell. If you keep the property and utilise the equity you pay Zero CGT.
Cheers Richard
Ph: 07 3720 1888
[email protected]
http://www.yourstatefinance.comSpecialising in US & IP finance.
Richard Taylor | Australia's leading private lender
Buying the IP in the right structure in the beginning is important..you need something flexible as your strategy and personal situation changes over time…
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorThanks for the prompt response. Justed wanted to get one under the belt when purchased this IP. Def needs to go though, its at its maximum potential (well at least for the next few years) and I love the saying “Would you buy the property now for the price I want to sell for, and if the answer is no, then sell it”
Most trusts will allow you to list a company as benificiary. This will give you all the benifits of a trust and capping income from the trust at 30%.
CATA
Asset Protection Specialist
[email protected]If you’ve held the property for more than 12 months (contract date, not settlement date) and assuming it is in your personal name, you will be eligible for the 50% capital gains tax discount.
Therefore, even if you are on top marginal rate of 48.5%, your effective tax rate is 50% of that (24.25%).
That’s whey when using a trust for property investing, capital gains are always distributed to an individual and rental income can be distributed to a corporate beneficiary (if required) to cap your tax rate at 30% on ordinary income.
cheers,
Mark Unwin
Williams Partners Pty Ltd
http://www.wp.com.au
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