Just wondering guys, I live in QLD and if I was to purchase a property the traditional way with title to transfer into my name and then was to on sell on an installment contract what would be my position on CGT. Is it because I have sold the property within the first 12 months I pay CGT and the whole amount even thou I haven't received any of the money yet or when is the CGT on the property due?
It depends…
They are possibly trading stock so not CGT would apply. Merely income tax. Just as if you were selling ice cream.
see "ATO ID 2004/25 Income Tax Trading stock: residential properties instalment sales contracts"
http://law.ato.gov.au/atolaw/view.htm?locid=%27AID/AID200425%27
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
Terry is on the money as usual.
RPI | Certus Legal Group / PRO Town Planners
http://www.certuslegal.com.au
Email Me | Phone MeProperty Lawyer & Town Planner
Terry is spot on with hat reference if it's established that you're carrying on a business. However if it's established that you're an 'investor not carrying on a business' then it's worthwhile also having a look at ATO ID 2004/407 at:
http://law.ato.gov.au/atolaw/view.htm?docid=AID/AID2004407/00001
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Thanks for that Paul. I see that one looks at the situation regarding an investor who does a joint venture with a property manager to sell the property on installment contracts. Do you know of any other ruling where the owner just sellings on their own without a JV involved?
Just thinking the ATO may regard someone doing it on their own as being in business themselves????
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
On a one off basis I'd guess they may not rule the Investor to be carrying on a business but, even if they do, ATO ID 2004/27 seems to cover that situation. It can be viewed at: http://law.ato.gov.au/atolaw/view.htm?docid=AID/AID200427/00001
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
I have a question quite similar to this situation: I would like to purchase a property in a traditional with an intention to onsell on vendor finance terms (hopefully) both happening by settlement date. Would the contracts in the traditional title transfer require just a clause which allow me to do so or do I need more complex paperworks to allow myself in doing so?
Thanks Paul.
And mcho, you would be able to do with your property as you see fit. However if you were wanting to show prospective buyyers through before settlement then you would need a special condition in the contract.
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
ok. Thanks, Terry.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
