Hi ppl
I'm considering building a new ppor and changing existing ppor to ip. I've been in the current ppor for 8 years, during this time the loan has been refinanced twice, this was prior to becoming interested in property investing. My dilemma is if I decide to sell it after becoming an ip,
– will the CGT be calculated from the time it became an ip? ie sold during the first year = 50%CGT and after year 1 25% of the capital gain.
– will CGT be calculated from the sale price minus the current amount owed on the loan or the original purchase price from when it was first purchased?I hope this question makes sense, I'm just trying to weigh up as to weather I would be worse of keeping it as a ip or selling it as my ppor cgt free. Any advice would be helpful.
regards
Hi Wade
CGT will apply to the duration it's an IP. Therefore, it's best to get a valuation carried on the property once it becomes an IP so you have a reference point down the track when it comes to working out how much CGT is payable.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Thanks Jamie
So technically if I was to refinance it whilst a ppor and take the equity and use it to the next ppor, get it valued then turn it to ip would this reduce the amount of CGT payable?
Yes a valuation would be needed
s 118-192 ITAA 1997 http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s118.192.htmlDebt is not taken into account when calculating CGT. So what you do with borrowings etc is not relevant for CGT – but it could be relevant for income tax purposes.
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
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