Hi everybody.
I have heard that some people are investing and carrying out minor renovations then selling them in a short period of time. Is that classified as capital gains or positive cashflow?
The reason i ask is because they said to me it was positive cashflow,but to me + cashflow comes from rent? I am confused. Please educate me!
Hi
Yes Positive Case Flow comes from your rental income. Rent – expenses = cash flow
Sharlene
[email protected]Sounds just like a business selling a commodity, which is houses in this case. I guess they mean they have positive cashflow because they are making a profit.
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
How are u all?
I guess what many people are doing is doing renos, getting some capital and then moving into buying properties that are going to give them +cashflow as the LVR is lower because the are using less borrowed money!
Any one agrees with me?
Take care.
Hope this can help.HI Baby@investing,
I heard something similar at a Martin Ayles Seminar. I think it comes down to how the taxation department interpret the earnings. For example, lets say you are renovating on or two properties per year on a part time basis, this would definitely be classified as capital gains as it is not you primary source of income. On the other hand, if you were full time renovating and doing, lets say 10 properties per year, then this could be deemed to be your primary occupation/business and therefore it is viewed as income.
A good accountant should be able to cover this in more depth though.
Cheers
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