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Property sale

Discussion in 'Accounting & Tax' started by smator, 13th Jun, 2016.

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  1. smator

    smator Well-Known Member

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    Hi guys

    Is there a way to arrange a sale of a property so that it falls into two separate CGT events so as to spread the capital gains hit into two different financial years? Is there a risk that this would be seen as a scheme to avoid tax? Is there any specific guidance on sales to relatives, does an Aunty to a nephew fall under this? Obviously I'll need to get specific advice, but was just trying to scope out the options.

    Thanks
    Steve
     
  2. Scott No Mates

    Scott No Mates Well-Known Member

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    Stamp duty should be at market value not at your contract value
     
  3. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Sell 50% in one financial year and then the other 50% in the next.

    Must manage loans and risk during cross over period.
     
  4. wylie

    wylie Moderator Staff Member

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    Can this really work? With our double block I was told by someone that if I sold one block to a developer in say June and the other block in July, that the ATO would lump both sales together and not allow me to split the two sales over two years to minimize CGT... especially as both blocks being sold to one entity would be seen as a scheme.

    Not a problem as we aren't planning on selling them together.

    I'm now trying to recall if it was the sales agent who told me this. I did ask him what they were worth and he brought us an offer. Perhaps he was telling a bit of a fib in the hope we would just throw up our hands and say "just sell them together".
     
  5. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    It is general tax law that the income is assessed in the year of the sale (contract date usually in these situations). I don't know if the ATO would attemp to apply Part IVA, and assess the gain in just one year - but anyone contemplating should seek advice on this.

    Stamp duty could probably be aggregated though, even though it is across 2 different years.
     
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  6. Greyghost

    Greyghost Well-Known Member

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    If it were 2 townhouses in a development then fine, but what is the reason behind wanting to split the sale of 1 house over 2 financial years?
    It is a scheme and as Terry touched on Part IVA would apply.

    Spousal transfers may give you a better arguable position, but if it is just a sale to a 3rd party then I'm sceptical of it working.
     
  7. USC

    USC Active Member

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    Spousal sale proportion of property one financial year. Then sale of whole property to 3rd party the next financial year. Issue will be stamp duty on spousal sale, unless in specific states (maybe just Vic?) where it could be exempt.

    Nb. All theoretical...I've never actually done the above.
     
  8. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    If the other buyer is not a related party then this could pose a risk and a serious concern. I would never want to co-own a property with another and the loan / mortgage security issues might be insurmountable too.
     
  9. smator

    smator Well-Known Member

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    Is it just stamp duty at market value? Is CGT at market value or contract value if there is a difference?
     
  10. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Market value applies where the parties contract other than on market value terms.
    (ie market value or higher is used for duty and CGT)