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Exit strategies.

Discussion in 'General Property Chat' started by proper_noobie, 7th Oct, 2015.

  1. proper_noobie

    proper_noobie Well-Known Member

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    What are some exit strategies to consider?

    If the government doesn't change cgt laws 20 years in the future, does anyone plan to live in an IP for 6 months prior to sale to avoid cgt altogether?
     
  2. MRO

    MRO Well-Known Member

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    Moving into an IP for 6 months after you have owned it for 20 year will not do a great deal to reduce your CGT liability.
     
    Propertunity likes this.
  3. hobo

    hobo Well-Known Member

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    I hate moving. That sounds awful. :p
     
  4. proper_noobie

    proper_noobie Well-Known Member

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    How is cgt calculated on sale of you've lived in a property?I thought if it was your ppor within the last 6 years then you avoid cgt?
     
  5. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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    No, not a chance.

    There is a 6 year rule but it does not work in the scenario you have described.
     
  6. joel

    joel Well-Known Member

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    You have to pay CGT on the capital gains made while it was an investment.

    If it is your PPOR and you move out and it becomes an IP, then you can still treat that one property as your PPOR for the next 6 years and avoid CGT. You can't move in at the end and get the past 6 years of gains tax free.
     
  7. proper_noobie

    proper_noobie Well-Known Member

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    Ahh I understand now. Doesn't sound so lucrative now but still something that should be factored in when planning a strategy.

    Thanks!
     
  8. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    It would be based on a % of the time you lived in it. So perhaps 4% of the cg will be exempt
     
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  9. JohnPropChat

    JohnPropChat Well-Known Member

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  10. THX

    THX Well-Known Member

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    Just wait for the bubble to burst then leave with nothing ;)

    So say the doomsayers.
     
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  11. MTR

    MTR Well-Known Member Premium Member

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    What if you have lots of IPs, not really sure what you would be saving? what if all the IPs are in areas that you dislike/don't suit for whatever reason?

    Am not interested whatsoever in this sort of strategy, I don't see the point as lifestyle is far more important to me.
     
    York likes this.
  12. proper_noobie

    proper_noobie Well-Known Member

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    Most people I talk to don't really know their exit strategy, me included.

    I'm in the acquire phase but not sure what to do once I've acquired enough. I'd like to buy a place in a nice area that potentially has a lot of growth, but I want to live in many cities over the next three decades so renting may be more suitable for my lifestyle.

    I am getting the grips on buying in growing markets, I don't know how, when or why I will need to sell.
     
  13. proper_noobie

    proper_noobie Well-Known Member

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    Me too - I'd like to own a few properties in each capital city. The lifestyle between cities is something I want to experience, which is why a lifestyle of moving around would work well for me but may not suit everyone.

    In saying that, I was under the wrong assumption of huge CGT savings if you live in a property for 6+ months, you're CGT exempt for up to 6 years afterwards, as long as you don't make another property your PPOR. Now that I know, it's not really attractive unless I want to get rid of a house that's in an area I want to stay and make up some minor tax savings.
     
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  14. datto

    datto Well-Known Member

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    What if somebody had multiple IPs. Sold them. Recklessly spent all the profit and then couldn't afford to pay the CGT.

    Then they went into some kind of taxation exile so that the bankruptcy trustee couldn't find them. Or in fact debt collection proceedings couldn't even be started against them because no notices could be served.

    There are probably people out there in this scenerio.

    Or, maybe they could, I don't know, apply for some kind of taxation relief under, say, Section 265(a) of the Tax Act. Maybe they could convince a Relief Board of hardship or something and not pay any tax.
     
  15. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Yes many.
    After being discharged from Bankruptcy they could no longer come after you for the prior tax debts.