CGT question..

Discussion in 'Loans & Mortgage Brokers' started by CCHO2015, 31st Aug, 2018.

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  1. CCHO2015

    CCHO2015 Member

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    Hi we are planning to sell IP 1 and our PPOR (both under husband's name) this financial year and another (IP 2, this is under both me and my husband's name) next financial year.

    I am currently a stay at home mum with no income. My husband earns approx 104k a year after tax. A few weeks ago we spoke to our accountant about how much CGT we are expected to pay.

    With the 1st IP we are selling this year, he said CGT is approx 30k with approx 75k profit (after the 50% discount).

    I have read on property chat about possible ways to reduce CGT by reducing taxable income and I would really appreciate some clarification on some of the questions we have and to make sure we are on the right track.

    First, we will be reducing our taxable income by

    - Painting and changing the carpets for 1st IP and PPOR
    - aim to do our tax the next financial year and keep the profit in our offset account
    - Get a car salary packaged as accountant says this will help to reduce the taxable income

    Questions)

    - Is there anything else that we should be considering to reduce the taxable income?

    - We are planning to move to our IP 4 in the next financial year. Our plan is to use the profit from selling PPOR and IP 1 and to do some repairs this financial year in IP4 and make it our home for min 5 -7 years. If we start the repairs in June while tenant is still there and move in July (new financial year) are we still able to claim these repairs for the current financial year? If so, we would like to do the following things before we move in but I wasn't sure which ones would be considered repairs and that we could claim for immediate deductions this financial year as we thought this might be a way to reduce taxable income whilst we sell our IP 1.

    Some of the ideas we have are:
    - Change the tiles in the bathroom and toilet (wall and floor)
    - Change the kitchen cupboard doors and handles
    - Paint the bath tub
    - Change the shower screen for bathroom and ensuite
    - Change the toilet and basins in the bathroom and ensuite
    - Change the glass on the glass sliding door
    - Change all the doors in the house
    - Paint the interior and exterior of the house
    - Is there anything else that we should consider doing so that we can reduce our taxable income whilst the place is still rented out this financial year?


    Thank you.
     
  2. Terry_w

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

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    These things won't really reduce your income by that much.
    Pre-paying interest on remaining IP loans much result in a bigger deduction, but there are many issues to consider, such as deductions the following year for that.

    I have written a tax tip on this topic:

    Tax Tip 119: How to Reduce CGT on Investment Property (Part I) Tax Tip 119: How to Reduce CGT on Investment Property (Part I)

    Best to get some specific tax advice.
     
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  3. CCHO2015

    CCHO2015 Member

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    16th Jul, 2015
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    VIC
    Thanks Terry..

    One quick question, if we sold 30k worth of crypto this financial year would ato consider this as a loss? hence reduce cgt? (similar to selling shares?)
     
  4. Terry_w

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

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    Depends on what the cost base was I guess.
     
  5. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    There may be a CGT or revenue loss. Seek tax advice as BOTH may reduce tax payable in different ways. Its not a choice but part of the calculations