I Hate CGT!

We should all be avoiding as much tax as possible. It's 'evading' that's problematic aka illegal

 

Good for her! Can I ask you how she did that? Because its good to know...

 

Surely the option fee forms part of the sale price for CGT purposes?

 

@Jmillar - seen it done before. Land was subject to a compulsory acquisition but went down the path of negotiated outcome.

The acquiring authority paid $$$ for the rent and very little for the site after exercising the option. Obviously a lot of legal and financial advice was sought by this landowner.

Alot of income tax was payable.

 

To me, paper losses => depreciation.

So, if one’s property portfolio has say $100,000 in depreciation, and this causes your tax return to show say $50,000 tax loss, then one can have $40,000 in capital gain in the same FY without paying CGT.

As you know, one does not fund a depreciation expense out of cashflow. It is a paper expense.

Whereas, a capital gain on a sale does end up in one’s bank account.

I am not accountant. Hopefully, I explained that correctly.

Not advice.

 

Cool

 

@kierank

Haven't I advised you in the past not to give up information/strategy without first invoicing for expertise rendered...

Getting (pardon the pun) soft in your old age eh...

 

I just checked with the wife and she said that I am NOT getting any softer as I age .

Your invoice is in the post . Make sure you pay it this time .

TBH, I think most people know this stuff, namely:

1. Buy assets that one believes will produce capital growth (eg shares).
2. Buy assets that one knows will produce paper losses (eg property) so there is no negative impact on one’s cashflow.
3. Determine the size and timing of one’s sale of assets from 1. above to claw back the losses from 2. above and not pay CGT.

Probably some of us understand this approach better than others and some have the ability and opportunity to employ it more others.

As you know, part of my reason for being on PC is to help others.

I shared this on PC so others can see a real example.

 

Thankyou for that......For your information, that was TMI

Despite significant paper losses, there was still a large CGT component.

On the plus side, as we sell more down, there should be no more large CGT for the near future, as none of the remaining Sydney properties are earmarked to go just yet. Although some CGT will be payable, the cost of houses was more modest, and so are the gains.

 

That was my problem.

 

I think you mis-read my post .

In our relationship, the wife is the emotional/soft partner and I am the logical/hard one.

After 38 years of marriage, the wife says nothing has changed.

I don’t believe her but it is not worth an argument .

Yeah, property is too lumpy. One can’t sell a couple of rooms and claw back tax losses.

That is why I buy shares for growth and then later sell some to claw back tax losses. If one plans it right, one can set up the gains from shares (by calculating how many shares to sell at what price, ...) so that these gains match the tax losses. No CGT to be paid.

 

One needs really large paper losses for this to work when selling property.

That is why I prefer to sell shares.

That is our strategy - never sell property (unless one has large tax losses to claw back).

Like all good strategies, the one above takes time to weave its magic.

It is a lot tougher to achieve in a short timeframe.

Don’t talk to me about Land Tax. I feel your pain.

 

Don't want to derail the thread, but if I don't have and share losses etc to defray CG, what's the best strategy to reduce CGT if I'm looking to sell a property in the next couple of years?

 

Quit your job.

 

I did that one year to reduce the CGT. Taxable income split between the two of us was negligible at the time, so a bit of extra tax in the following year was a great strategy.

 

I presume they would be worse off if they were having to pay it as income tax as they lost the 50%CGT discount?

 

So you'd pay 2 lots of interest in the FY you decide to sell, then just maintain paying one year's worth beyond that?

 

Commercial owner no CGT discount.