Capital gains tax and moving the investment into another building. 1031 exchange

Discussion in 'The Buying & Selling Process' started by Paterson00, 13th Feb, 2017.

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  1. Paterson00

    Paterson00 Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    218
    Location:
    Perth WA
    Hi all

    In the USA there is a system you may be aware of which is called a 1031 exchange. It simply means that if you want to sell a building, you will not pay capital gains tax on it so long as the money from the sale is reinvented into another building with the same value or more.

    I don't know exactly the details of this but i would like to know of something exists here or in the UK.

    I have a house in the UK which sits at about 63% LVR. I am struggling to release the equity now that i live here. It's performing well but I believe in the long run i would be better off selling so that i can use the equity to increase the portfolio size and total gross value.

    I paid about £123k in 2003 and it is now worth around £210k with a mortgage of £133k.

    If I sell I'll be up for GCT although I'm not sure how much. We lived in the house until 2012.

    Anybody on here care to pass comment? Not exactly sure what to do for the best.

    I am in a fixed rate mortgage locked fir another 4 years. To get out of that today would be about £5k so I'm not in a rush to move on this until that release fee reduces to a sensible rate.

    Thanks all.

    Paul
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
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    Location:
    Australia wide
    Nothing like that here.

    There is limited rollover relief for small businesses but it won't apply in these situations
     
  3. Paterson00

    Paterson00 Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    218
    Location:
    Perth WA
    Thanks Terry thats a shame
     

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