Hi All,
I purchase my PPOR 4 years ago in Newcastle, NSW but now I have to move to Perth, WA because of job commitment.
My PPOR has A$ 10k left to be paid off which can be easily paid off. I don't have an offset account (my mistake from stupid broker). I am thinking about purchasing another property in WA.Needed suggestion!
1. Transfer my PPOR into Family trust to avoid high tax margin but still incur stamp duty 15k and land duty tax. (I don't think I have to pay CGT for my PPOR if transfer to DFT). Do I have to get a valuation by valuer.
Once I transfer to DFT, am I still be able to borrow equity from DFT?2. Leave the PPOR as it is and rent in WA!!
Any other advice?????
Cheers
How long are you moving away for? Is it a temporary move? Can you see yourself moving back to your PPOR in Newcastle?
If so, rent in WA and rent out your PPOR. As long as you are away from your PPOR less than 6 years, there will be no CGT when you sell.
If not, have you considered selling the Newcastle home, and using the proceeds to start a investment portfolio, perhaps in a Family Trust.
I am going to WA for 2-year job contract. I might or might not be moving back again…..
If I sell my 1st PPOR into my DFT, do I get an exemption of capital gain of PPOR if I am buying again in WA?
god_of_money wrote:I am going to WA for 2-year job contract. I might or might not be moving back again…..If I sell my 1st PPOR into my DFT, do I get an exemption of capital gain of PPOR if I am buying again in WA?
Yes, your WA PPOR would qualify for the main residence exemption.
I got a really good bargain when I bought it 3 years ago as 'divorce settlement'. I am keen to keep it as my cash flow is not a problem. I just want to cut down the 'tax' to Rudd's pocket. The only way to do it is through DFT with distribution to my wife.. I am sick of paying top marginal rate.
you poor bastard…
Shales, I hope that more contructive comment than what you just posted
You could sell to your DT and then use the funds to pay a very large deposit on the new PPOR in Perth – but work out the tax savings v the stamp duty and remember that any loss in a DT cannot be used to offset your personal income.
Also consider that you are only in Perth for a short time and what will happen if you buy and then move out in 2 years – do you sell to your trust again?
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
Hi Terry,
Thank you for your comment…
I am thinking about RENTING the place to live in WA (i.e. not buying).
My wife will lost her job due to transfer therefore I can distribute to her through DFT.
I might not come back again to Newcastle.The rental appraisal by RE agent last year is ~A$380-400/week.
I would get the valution prior to transfer to DFT. Is this correct?
If I am on the high tax margin… it means that 40% will be taxable on rent ?
My calculation is as below:
Scenario 1:Rent A$ 400/week x 52 = 20800
?? Depreciation value = 8000 (estimated from WashingtonBrown calculator.. will get full surveyor report)
Taxable income 40%Total = 17200 (1st year)
2nd year = 17200Scenario 2 (with DFT):
Rent A$ 400/week x 52 = 20800
Depreciation value = 8000
Land tax = (-)1500
Stamp duty = (-)15000
Management fee = (-) 1500
Miscellanous = (-) 1000
Total Approx A$ 9800 (1st year)
2nd year = 24800 but tax at lower incomeAm I missing anything in calculation??
Not sure which one is the best
Cheers
1st year benefit/loss =
Stamp Duty won't be a deductible expense, but will add to the capital value of the property, and you've added depreciation instead of deducting it.
For tax purposes on your estimates, the first year profit would be $8,800.
If you received this income, the tax payable would be $4092 (at top marginal rate of 45% + 1.5% medicare levy)
If distributed to your wife, through a trust distribution, it would be tax free (assuming no other income). In four years, assuming similar figures, the tax savings will have surpassed the projected initial outlay of Stamp Duty.
The other factor to consider is if you rent for 4 years and then sell, in your name there will be no CGT, in the trust name there WILL be CGT.
The decision may hinge on what you plan to do with the property in the medium to long term.
Has anyone got experience on transferring PPOR into DFT?
Any regret or benefit in the futureCheers
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