Extra suggestions for minimizing capital gains tax?

Will sell a property within the next 3 - 4 months. (Thanks APRA......)
Other than 1 - 5 below (thanks @Terry.W), I have another possibility that I am considering.

Existing options for minimising CGT:

1. Sell in lower income year - tick
2. Maximise super contributions - (planned) tick
3. Offset with losses (not possible - no losses)
4. Die while living in the property (don't fancy that one.... )
5. Maximise tax deductible expenditure - tick (will do big ticket maintenance in this financial year)

Possible Option 6. Increase interest repayments as follows:

Currently have a sizeable offset account ($200k) and wonder what suggestions there'd be for 'spending' or 'using' that now, in this financial year, and then being able to access it again next financial year.
Thinking along the lines of buying into shares or similar?, and then selling, though I'm risk averse, so interested in people's suggestions.

Similarly, if I can jig my loans I may be able to prepay interest.
Although those last options mean less deductions next financial year, it is still better for me to minimise tax this financial year.

Anything else?

 

If you purchased an investment asset with the full $200k at 5% pa that would be about $10,000 in interest for a full year. That might save you at most $4,700 in tax. But you would be getting income from the investment (otherwise the interest wouldn't be deductible).

Who owns the property?

 

And what is the size of the capital gain?

 

Only personal tax advice could assist. Prepaying interest is NOT always deductible

 

The property is in my own name and expect total gain (after +/- expenses, depreciation claimed) of around $180k, less 50% so max $90k added to taxable income.

 

Thanks Terry. You mention an investment asset from which I'd be getting income. I was thinking along the lines of something where the 'income' or profit could be realised next financial year eg buy then sell asset after 12 months so gain falls in the next financial year.

 

Will seek advice on the prepaying of interest.
However, my understanding is that if prepaying interest gives the taxpayer a financial advantage eg lower rate, then this is generally acceptable, no?

 

Pay any outstanding land tax

 

I assume this only works if you are behind in payments, or did you mean to pay it in advance of the financial year in which it will fall due?

 

What is such an investment?

 

You could sell 50% this year and 50% next financial year - perhaps more hassle than it is worth and will only make a difference if dramatic income change.

Paid any LMI on loans within the last 5 years? could refinance to trigger rest of the deductions.

 

I don't know myself, hence the enquiry, thinking that there are products that would serve the purpose.
eg. On the simplest level, 12 month term deposits payable on maturity....... but no benefit in that case with such a low rate on the deposit.

Also, the money is my money in the offset, not a redraw, so purpose for use of the funds isn't a concern.

Not sure I understand what you mean there? Sell 50% of.... an asset?

You are probably right about it being more hassle than it's worth.
In the end the savings won't be that great, but would still be worthwhile if the process to do so wasn't complicated.

 

Tip # 1 : To avoid CGT just dont sell

 

Prob not worth considering but under the right circumstances could sell half to a non-working spouse and then both of you sell next year. Could help if the property is in nsw and you don't mind moving twice.

 

Part IVA ?

Splitting a sale using a spouse sounds like a scheme. What is the predominant purpose for doing this ? To save tax...Hmmmm. Part IVA.

 

It is unlikely Part IVA would apply in this case - there wouldn't likely be any tax savings anyway.

 

Appreciate all the input.
And yes, simplest option would be not to sell!

 

I would love to do that however some circumstances/strategy may require selling hence seeking some guidance-purchased the following property for negative gearing purposes (95%-myself and 5% under Mrs).

IP Details: 4/2/2 House in Melb -purchased 28th July 2016 (settlement date and initial deposit date was sometimes in 2nd week of June 2016).

Tenants: Always on rent no vacancy and lease is finishing mid Feb 2020 and notice has been given to tenants.

Since 2016 area has seen a capital growth and planning to sell and the buy shares or another IP in an area where prices are low with aim to get further Capital Gains.

Given that we have been holding the property for longer than 12 months so after paying the loan and other expenses - we do need to pay CGT on left over amount (CGT will be slashed to 50%).

Now, we do work full time hence yearly income + 50% of the capital gain.

My questions are:-

1. If we invest the CGs straight away into Shares-Do we still need to pay CGT on 50%?

2. If we put all the CGs into our PPOR and Redraw to invest (debt recycling)-do we need to pay CGT on 50%?

3. If we use all the CGs to buy property overseas (non rental income property) do we need to pay CGT?

appreciate constructive feedback.

 

1. Yes
2. Yes
3. Yes

Spending the gain doesn't change anything.
Also the loan generally has no effect on CGT