Has anyone sold a property by giving the purchaser a second mortgage to cover the deposit?
The major pitfall I can see is having the ATO deem you have made a profit on sale, but not having the funds to pay the tax because they are tied up in the second mortgage.
Anyone got any suggestions??
Graeme
Yes, that is a potential draw back. But at least you will not have to pay the CGT until you lodge a tax return – and that could be years away
Terryw
Discover Home Loans
Parramatta
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
That’s interesting advice- don’t lodge a tax return for years?
Rick Otton talks about doing second mortgage carryback on properties that he turns over quickly which means that profits would be trading profits taxed in full, not CGT.
Any other suggestions?
If you are using an accountant, you have about 10 months to lodge your return. I have know many people who extend this to years!
It will all depend on how much your profit is, how much you are vendor financing and how long your vendor finance loan is going to be. I imagine the CGT wouldn’t be too much of a burden.
If your classed as a trader, then you may be paying more tax, as you won’t get the 50% discount, so I am not sure if this would help, but it may be easier to offset??
Terryw
Discover Home Loans
Parramatta
[email protected]
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Just send me a blank email, with “subscribe†in subject line.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
Here it is……how many are you doing?
Do one and you get hit unless you can prove this is the business you are in
if this is the business you are in then you pay the tax when you receive the profit
http://www.rickotton.com
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