hi first time user here. I’ve read (2) books of Steve’s and would like to know whether capitalgains tax on a wraps sale is to be paid at the signing of the contract or at the end of the contract?Thanks.
rather than ask whether there is capital gains tax, it is probably more appropriate to ask whether there there is a taxable income being derived.
You are undoubtedly making an income, and it would be very hard to argue that it should not be taxable. Your sole purpose for doing it is to makea profit.
I would suggest that it would be looked at in a similar way to commission received by a real estate agent.
Of course it would be difficult for the ATO to actually find out that you had made money from the deal, but if they did find out and you hadnt declared it you would be in a lot of strife, copping not only tax, but fines and penalties as well.Hi Steve
To overcome the point you make about CGT and vendor financed real estate transactions, simply make sure you undertake the transaction within the bounds of the “correct” business structure. Check with your accountant to confirm this but if you are in the “business” of vendor financing real estate, there is a good chance that the ATO will charge you tax on an “emerging profits” basis.
If you get the right business structure (company, trust, etc) your profits should be treated this way, i.e. you will only be taxed on your profits as they “emerge”.
May I suggest you grab a book call “How to Legally Reduce Your Tax” by Ed Chan. It’s $25 and is a very easy read. It’s also invaluable. Thereafter, if you decide to get into vendor financed real estate, see a good accountant first and get your “structure” correct right from the begining.
Good luck.
Cheers, Paul
Paul & Karen Dobson
negative2positive
Turn your negatively geared property into positive cashflow.
Phone: (02) 4984 9540Talk to us about Wrap Training Joint Ventures.
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
