100% CGT!! Most interesting excuse

Yes, I think I am Terry, my accountant takes care of this stuff, even better at 24%.
For some reason I thought 30% thinking of company.
Distribution was made last year. Still confusing to me, but anyway I think this structure is working well for me as a developer.

Cheers
MTR

 

As I mentioned there are various structures you can use to help with tax, I am not an accountant so not an expert on this, but certainly something worth looking at especially if you are trading.

MTR

 

there are ways to avoid CGT even if it was 100%, i had a situtaion like this whereby an IP i sold was subject to CGT and i resorted to changing my loan structure of 4 of my ips to prepaid interest for 1 year, thereby pushing forward the CGT to the following taxation year where i could plan other deductions.

 

Nice work.

In USA its very much investor friendly, if you sell an investment property and use sales proceeds to buy another investment property you avoid CGT. Simply fill out a tax form that covers this. Wish we could do this here

MTR

 

yeah i noticed that - i am a keen follower of million dollar listing TV series (new york, la, san fran). especially new york ones and you see australian major cities possibly becoming like that where properties are literally in the millions and there so many buyers and sellers and it seemed normal to them to pay x million for property 1,2,3.

 

On the issue of CGT and also stamp duty, you don't pay stamp duty in USA as well..... and
...... also in NZ you don't pay stamp duty or CGT. This is huge, especially for those who use the strategy of renovating, all the profits in Australia go to the tax man, stamp duty/CGT.

Australia is not so great for investors unfortunately. That's my rant for the day.

taxes, taxes, taxes

 

Aren't companies 28.5% now thanks to Liberal's recent changes, or are only certain types of companies eligible for this, do you know?

 

Really, don't know?? Good on you Libs if they got this one over the line

 

This one Small Business - tax cuts for small business | Australian Taxation Office

 

I would still buy property but I would put a lot more money into shares than I currently do. If this policy was implemented in Australia it would likely cause a massive share bubble. I can't see how that would be any better for the economy than the housing bubble we allegedly currently have.

 

I would still buy property...Paying tax just means you are making money. Obviously, you look for ways to minimise your costs but I doubt that having no CGT discount would have an impact on the market.

 

What was being discussed earlier was that your entire capital gain would be paid to the government. So if you buy for $300,000 and later sell for $600,000, you pay $300,000 in tax. It seems absurd to even discuss it, but what would happen? People would move their money to other asset classes, such as shares and cause a massive stock market bubble. Seems to me like we would not be better off under this scenario.

 

Then I misunderstood :S If you had to pay all your CGT to the government I would think that people would turn to buy and hold as a strategy (never selling, or very rarely selling) and also looking for more cash flow positive properties.

 

That is what i understood also. The WHOLE amount gets taxed. You would want one heck of a yield to make property a viable investment then. But MsAli did clarify it later on.

 

Actually my post was wrong. 50% discount only applies for assets held longer than 12 months so max CGT would be 47% if held less than 12months.

Also CGT may not apply to developers where it will just be income tax.

 

From the 2015-16 financial onwards, the company tax rate for small businesses with an aggregate turnover of less then $2 million is 28.5%. I am not sure property investors would qualify as 'small business'. I haven't looked into this yet.

 

Good point. It could make things worse as supply is restricted. This could have the opposite effect of what the agitators are trying to achieve.

 

yes income, but then it will be same rate as company tax????

 

If it a trust income it would be taxed in the hands of a beneficiary - which might be a company at 30% or may be a person on 0% to 47%.

 

thanks, got it, makes sense now