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Offsetting CGT

Discussion in 'Accounting & Tax' started by spider, 18th Oct, 2015.

  1. spider

    spider Member

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    Hi,

    I am contemplating selling a property which will have a capital gain of approx. $200K. To offset CGT I would like to either pay interest in advance on other properties or place money into a superannuation fund. I believe (but don't quite understand) there is a 10 percent rule governing the offsetting of CGT with money placed into superannuation funds. I am over 60 so I guess once I place the money into super I can withdraw it later on (after I pay the 15 percent contributions tax - still better than the CGT). Can anyone recommend a financial advisor in Sydney.

    Thanks
     
  2. jrc

    jrc Well-Known Member

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    You need to get your accountant to work out what your estimated CGT will be after taking into account depreciation and building write offs.

    I assume when you say there will be a capital gain of $200K that that is before the 50% discount for holding the property for over 12 months. If that is correct and if you would be paying the maximum marginal tax rate, the capital gains tax will be slightly less than $50,000.

    Have you got any capital losses that can be used to reduce the capital gain?

    Paying interest in advance might help. You can only pay in advance for tax purposes for 12 months. You could redo your insurance and pay the full premium in June. You could bring forward any tax deductible repairs and maintenance. But unless you keep doing these each year until you get into a lower tax bracket you are only postponing payment of tax rather than reducing it.

    Super is complicated. I think the 10 % you refer to is the rule that an employee can only make tax deductible contributions to super if their employment income is less than 10% of their taxable income, so if you are still employed you would need to salary sacrifice through your employer. Maximum super contributions in a year then including what your employer is already paying would be $35,000.
     
  3. spider

    spider Member

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    Thanks JRC,

    Thanks for replying, Yes...the $200K is before the 50 percent discount. No capital losses. I am employed but as a contractor and my salary is paid into a trust so I am not sure how that effects the 10 percent rule. Any recommendation of a financial adviser would be kindly received

    S.
     
  4. Ed Barton

    Ed Barton Well-Known Member

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    I think you need an accountant not a financial adviser.
     
    Terry_w likes this.
  5. wylie

    wylie Moderator Staff Member

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    Paul@PFI on the forum could be the man for you.
     
  6. Scott No Mates

    Scott No Mates Well-Known Member

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    @spider - have a chat with your accountant (familiar with your trust). If you have discretion over the distribution of income (which is taxable in your hands) reduce your income to lower your marginal rate of tax as far as possible.

    Are you the sole owner of the property or shared with spouse etc?
     
  7. spider

    spider Member

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    Thanks, the property is shared so 50 percent share after the 50 percent rule for CGT. After all the replies I will approach my accountant. Thanks all

    S.