Offsetting stock losses against property sale profits

Discussion in 'Accounting & Tax' started by robbie_p, 17th Mar, 2020.

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  1. robbie_p

    robbie_p Well-Known Member

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    Hi All,

    I am just looking for some very high level advice here…

    In September 2019 (this tax year) we sold and Investment property. There was a profit of about $100-120k.

    We had owned the property for 5 years. I’m a salaried employee (+$100k pa) and my wife doesn’t work.

    I put about $15k into stocks, which have now dropped about 30%, therefore I have a potential loss of about $4,500.

    I always see myself as a long term investor, so I am more than happy to to hold into my stocks for the next 20 years.

    At the same time, it might be a good opportunity to sell my shares, take a $4,500 loss and try to offset these losses against the profits made from the sale of my property.

    I know if I sell my stocks now ill make a $4,500 loss, but how much will that loss be reduce the tax payable on the profits made on the sale of my property? Will it reduce the tax payable by $4,500 therefore potentially no loss at all?


    Thanks in advance.

    Cheers,
    Robbie
     
    Last edited: 17th Mar, 2020
  2. Brady

    Brady Well-Known Member

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    Why would you be paying tax on your PPOR?
    Was it ever an IP?
     
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  3. robbie_p

    robbie_p Well-Known Member

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    Sorry, it became a IP after we moved interstate.
     
  4. Ross Forrester

    Ross Forrester Well-Known Member

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    If you incur a $4.5k capital loss this will be offset against your net capital profit. The discount, if eligible, will then be applied and then your marginal tax rate.

    So one option if that you will save $877.50

    4500 x 50% x 39%

    There can be other answers as well.
     
  5. Brady

    Brady Well-Known Member

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    Did you buy interstate new PPOR?
     
  6. melbourne171

    melbourne171 Well-Known Member

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    just keep shares. they will go up one day. don't be panic.
     
  7. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    I would be considering whether to sell the shares first. Once a loss is taken its done.
    Then determine what the true tax position is for the property. Worst case its a profit but its what it is - It could also be a loss or $0. You may be absle to make CGT choices eg absence, you may have not used the market value at the date it first rented and allowed selling costs etc. The loss can offset a profit if there is one. But dont sell shares just for this issue
     
  8. robbie_p

    robbie_p Well-Known Member

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    I was just exploring the options. I still have a fair amount of cash i wont to put into the ASX, however, I'm going to be very cautious over the coming months and put in smaller amounts.

    As mentioned, I'm seeing my stocks as a long term investments, so I'm sure it will all sort itself out by then :)
     
  9. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    You could wait for the base and double down.
     
  10. robbie_p

    robbie_p Well-Known Member

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    What exactly does this mean? Would it be something along the lines are waiting for prices to drop further, buy some more stocks, which would bring my average buy price down?
     
  11. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    Dollar cost averaging.

    Lets say you purchased 100 CBA x $83 several months ago for $8300 now valued at $65.66
    You buy another 100 CBA x $65.66 assuming the market has bottomed (or wait until it does) and is just reacting to short term panic and you belive the economy will rebound.

    So you now own 200 CBA at an avg cost $73.33
    In three months the market recovers to $75 per share. You sell all 200 and there is no loss - a small profit. You lost $10 on one parcel and made $10 on the other
     
  12. robbie_p

    robbie_p Well-Known Member

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    Dollar cost averaging is EXACTLY what im planning to do in the coming months.. as you said, bring my average buy price down.. always buying a fair bit less than my current average buy price.
     
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