Reduction of Capital Gains Tax .....legally

Discussion in 'Accounting & Tax' started by John Smith, 29th Jul, 2020.

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  1. John Smith

    John Smith Well-Known Member

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    Hi there. Looking for some advice on an “old chestnut”. I will be selling an investment property in August 2021 after holding it for 20 years. At this point in time, I will be retired and living off my pension stream with 1.6m and will still have some funds in accumulation phase. Will also have some share dividends. After all expenses deducted, I expect to make a $300,000 profit.
    My taxable income for the 21/22 year will be based on a small amount of rent from the sold property, dividends and the 150k (50% CGT discount subtracted). I will be carrying forward some losses from previous years, will be selling some other poor performing shares and will make a 25k concessional contribution to my super. Have I got all bases covered to reduce CGT or is there another strategy I can use? My wife will not be working either if this makes any difference and the property is in my name.
    The eventual point is to use the funds to top up her super.
    Any thoughts??
     
    John Smith, 29th Jul, 2020
    #1
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Terry_w, 29th Jul, 2020
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  3. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Did you ever live in that property ?
    Age / Work test / 3 year Bring Fwd rule
    Concessional cap v Non-concessional cap
    Catch up concessional cap may be higher than $25K
    Spouse super split strategy between 2020 and 2022
    Withdraw and recontribute strategy

    Your wife's tax free threshold wont assist BUT given there are share divs some tax planning on triggering disposal or inspecie transfer to her (or super) may be a consideration provided it doesnt produce further CGT income. eg a loss at presnet market rates could be a further assist.

    Note much of this is financial advice and full advice is best obtained.
     
    Paul@PAS, 30th Jul, 2020
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  4. John Smith

    John Smith Well-Known Member

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    Hi Paul.

    Wife has 1m in super and I split my contributions into her account already. Bring forward rule won’t work for me as I have more than 1.6m in super so I can only contribute 25k and then split with her.
    Keep in mind that we do not have SMSF’s.
    Withdraw and recontribute strategy may need exploring. Can you forward me a link for this to do some research?
    Sincere thanks.

    Bring forward rule on concessional contributions
     
    Last edited by a moderator: 31st Jul, 2020
    John Smith, 30th Jul, 2020
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  5. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    I cant provide information on recontribution strategies as that would be financial advice
     
    Paul@PAS, 31st Jul, 2020
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  6. John Smith

    John Smith Well-Known Member

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    Thanks anyway for your input.
     
    John Smith, 31st Jul, 2020
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