Selling IP within 1 year

Discussion in 'Accounting & Tax' started by Mr.Investor, 15th May, 2017.

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  1. Mr.Investor

    Mr.Investor New Member

    Joined:
    15th May, 2017
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    Location:
    Sydney
    Hi all,

    I am new to the forum and forgive me for asking a question straight away.

    I bought an IP in Queensland and looking to sell within a year of purchase (I could hold off a few months). I would like to know what are the tax consequences or other costs or other things to consider if I sell the IP. The purpose of selling the IP (apart from the fact that there are unforeseen maintenance costs) is to raise deposit for 1st PPOR.

    Appreciate your thoughts and any links where I can read up on the same. Many thanks :)
     
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  2. Holmes2012

    Holmes2012 Member

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    20th Jun, 2015
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    Location:
    Brisbane
    No capital gains tax discount if you are making a profit as you are holding for less than 12 months.

    If you have fixed the loan, there could be break fees (all deductible for tax) but could affect profitability.

    Are you making money, losing or breaking even after factoring all costs?
     
  3. Pentanol

    Pentanol Well-Known Member

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    Sydney
    Is there any reason to buy a PPOR? Why not rentvest? The PPOR will not supply you with any income and will affect your borrowing capacity especially if you pay P+I. This would especially be high in Sydney and I would recommend buying it unless its a CG play and you have one in mind. You may find yourself being able to pull equity one day to buy a PPOR in any case.
     
  4. D.T.

    D.T. Specialist Property Manager Business Member

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    Location:
    Adelaide and Gold Coast
    In laymen's terms:

    Sell price minus buy price = profit
    Profit added to your income increases your tax paid.

    Certain costs involved in the buying , selling, or renovating processes can be minused off the profit which in turn reduces tax payable.

    Owning for over 12 months gets you a 50% discount on the tax payable. Under 12 months does not.
     
  5. Paul@PAS

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

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    A key question any tax adviser will ask relates to why are you selling so soon after acquisition ? Where you acquire and sell with an profit making intention the profit (if any) would be an income issue and even after 12 mths no CGT discount. But assuming its all held on capital account its possible in such a short space of time there is a loss....Review of the annual holding costs and any equity loss/gain should be made to determine its it wise to sell. I often see people sell thinking it will improve their financial position when its lineball and of little benefit to sell.
     

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