All Topics / Help Needed! / PPOR changed to IP

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  • Profile photo of teds01teds01
    Member
    @teds01
    Join Date: 2010
    Post Count: 19
    August 23, 2011 - 10:28 pm

    Hi,

    Could anyone advise on the following please:

    We moved out of our PPOR of 3 years in April 2010 to try out life in Queensland. We switched to an IO Loan and we leased the property out, it is now an IP.

    We are looking at the following options and do not know how CGT will affect us if we sell:

    Option 1
     We sell the IP early next year, do we still pay CGT? If so, how do we know how much?

    Option 2
     We subdivide sell the original house at the front, and sell the vacant block of land, do we still pay CGT? If so, how do we know how much?

    Option 3
     We subdivide sell the house at the front, keep the land to build on, do we still pay CGT? If so, how do we know how much?

    Hope this is not too confusing.

    Cheers

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    August 24, 2011 - 12:26 am

    1. possibly no CGT
    2. If there is a profit then tax would be payable.
    3. same as 2

    It is not easy determining CGT/Income tax on a main residence sub-division. Go to bantacs.com.au and look at their PDF booklets for some ideas.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of teds01teds01
    Member
    @teds01
    Join Date: 2010
    Post Count: 19
    August 24, 2011 - 1:52 am

    Thanks for reply Terry!

    I had a quick look at bantacs site. I think you are correct. Will just have to crunch numbers for each option to see if we can obtain the desired outcome.

    Cheers

    Profile photo of Ryan McLeanRyan McLean
    Participant
    @ryan-mclean
    Join Date: 2010
    Post Count: 547
    August 27, 2011 - 6:48 am

    Why are you selling it? Why not keep it, find a way to make it cash flow positive and that way it will pay for itself? Then continue to expand your investments and grow your income, instead of selling for a quick buck?

    If you need money you could always borrow against the equity on the property (if the rents and your cash flow can handle it).

    Or consider selling via owner finance to get a better deal and to create some cash flow. You might like to read my blog post on Selling Using Owner Finance for more information on this topic.

    Ryan McLean

    ps. Think long term and try to grow your wealth, don't focus just on the short term.

    Ryan McLean | On Property
    http://onproperty.com.au
    Email Me

Viewing 4 posts - 1 through 4 (of 4 total)

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