Hi Experts!
I am new to vendor finance. If I sell my property using vendor finance when do I need to pay for CGT? My understanding is I don't need to pay CGT until the settlement and the CGT amount is based on the contract date. Can you please let me know if my understanding is correct based on the current ATO rulings?
Also, would I still be liable for land tax if I sold my property using vendor finance but the property has not settled yet? I live in Victoria and appreciate your comments!
Thanks heaps!
Amy
Hi Amy
I believe your understanding of the CGT implications of selling a property are correct but I'm not an accountant and I suggest you get professional advice on both your questions. Two internet resources on this question are:
1. Point 5 at http://www.jvpropertypartners.com.au/index.php?option=com_content&view=article&id=45&Itemid=74
2. Page 15 at http://www.bantacs.com.au/booklets/Capital_Gains_Tax_Booklet.pdfIf you are selling your property with a Lease/Option you remain liable for Land Tax on that property. If you are selling with an instalment contract, you can submit a Land Tax variation, that will move the Land Tax liability to the new VF buyers. Usually the VF buyers are purchasing the property as their PPOR so the Land Tax liability for the property often disappears. Point 4 at
http://www.negative2positive.com.au/index.php?option=com_content&view=article&id=45&Itemid=74
also covers this.Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Thanks heaps for your comments Paul! Greatly apreciated!
Amy
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