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Sold IP as a loss Please Help

Discussion in 'Accounting & Tax' started by bfhoon, 9th Aug, 2016.

  1. bfhoon

    bfhoon Member

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    HI Everyone

    I bought n IP in 2009 and just sold a few months back in 2016
    2009 purchased for $465000
    2016 sold $412,000 ( Yes I would have to be the only idiot in Australia to loose this much money im very unlucky)

    Anyways going to my tax agent he is prepping things up for me I have just purchased a PPOR I have a daytime job and a small business on the side internet based where we work from home. He has suggested it may be an idea to use my capital loss to ofsett the business somehow using my ppor. I have heard of this being done but then when you goto sell your PPOr you get taxed then or something like that can someone please explain in more detail for a lamen and also advise whether I should do it or not?

    Thanks
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    I cannot understand what he would be talking about. The main residence is exempt from cgt usually.
     
  3. legallyblonde

    legallyblonde Well-Known Member

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    Did you claim a portion of you home when you were running your business? I am a bit confused about the scenario.
     
  4. Biz

    Biz Well-Known Member

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    You really need to meet the Moranbah crew.
     
  5. Scott No Mates

    Scott No Mates Well-Known Member

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    A capital loss can be offset against a capital gain but not against income. If you grow your business & sell it at a huge profit you may be able to offset the $53k (probably more when you add back your stamp duty, legals, selling commission etc).
     
  6. bfhoon

    bfhoon Member

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    I think that's what he's talking about claiming office space etc on my ppor and possibly claiming a percentage of mortgage etc and this offsets my loss from my ip. Just need to find out the ads and disadvantages
     
  7. MikeLivingTheDream

    MikeLivingTheDream BCOM MCOM MTAX CPA CTA Registered Tax Agent

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    if your main residence was used as a 'place of business' you dont have a choice whether capital gains applies or not. it applies regardless.

    does this mean all these years you havent claimed interest, insurance, etc when you could have as CGT applied anyway ? wont even be third element costs.

    two year amendment period.

    small business concessions could have been applied anyway.

    sounds like you got some very bad advice at the beginning
     
    Rob G likes this.
  8. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Wise to firstly clearly ascertain if home was a place of business.
     
  9. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

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    Is there any reason your accountant is not explaining this to you in a way you can understand it? So that you can make a calculated decision yourself?
    Sure there's great advice on this forum, but they're all just random strangers to you.
    If your own accountant can't help you properly, best get another one.
     
    Dean Collins, hobo and Skuttles like this.
  10. Username86

    Username86 Well-Known Member

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    Further to the capital loss if there was still some of the loan outstanding after the sale, maybe used equity elsewhere or changed to personal loan, would this still be a deductible expense as its no longer producing income?
    Sorry to hijack the post but I was about to start a new thread until I read this one.
     
  11. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Yes it could be
     
  12. Stoffo

    Stoffo Well-Known Member

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    Looking for some clarification on the above ?

    So I have a PPOR, I mow lawns for a quid, and park my ute and mower in the drive, the business is registered to my address..........
    So are you saying that CGT now applies ?
    Or are you saying it applies to "what" (if anything) I've claimed against by operating the business from home ??
     
  13. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Good question. The home is not a place of business. The business takes place at client premises. The home is a just a place where you do some work ie admin. Running your business from home | Australian Taxation Office

    However take Mary who sells $200K of gear a year on ebay. The garage is a warehouse. A room is set aside as a office with equipment etc and Mary works there 4 days out of five but still deals with sales 7 days a week.
     
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  14. Stoffo

    Stoffo Well-Known Member

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    Thanks Paul.
    So it is what has been claimed that has CGT (garage & office)
    Is there a work around financially, so that the garage or office do not incur CGT ?
    Or better to just not claim them at all ! (For the small amount you may get back)(ie: in 5 years my PPOR has a $500k capital increase in value V's claiming garage storage of $20pw = to 10% of the home now incur CGT )
    Sorry for the highjack BFhoon
     
  15. MTR

    MTR Well-Known Member Premium Member

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    ...or there is the Karratha, Port Hedland, Newman, Blackwater, Gladstone crew.

    Definately not the only one who lost money
     
  16. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    I have written a tax tip on a work around.

    The law basically says if you could have claimed the interest on a loan used to acquire the property then the property will be subject to cgt. Note is says .'could'.

    So if x is running the business and y owns the property Y could not claim the interest and the house would still be cgt exemp.

    X could be spouse A and y could be spouse B.

    Or

    X could he A and B and y could be a company.
     
  17. bfhoon

    bfhoon Member

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    Why is everything always so confusing...... My problem is I never sought advice to start with. I had a grand idea to start a business I did it all myself and surprised myself with the outcome however it was short lived only went well for about 2.5 to 3 years. I'm still running it but about to close it down, I have finally found an accountant he has all my tax stuff and just mentioned it via email so when I sit down with him he will probably explain it better to me I just thought I would get some knowledge in my head so I can make a decision beforehand and not on the fly spur of the moment I like to ponder things through for a few days.

    This is what he wrote via email

    Maybe need to look at a home office claim re based on the floor space used for business & claim that same % compared to the whole house for rates, Water Insurances Interest paid etc, It may subject a portion of your home to capital gains tax but I your case you will have a loss to offset this


    So Ive sold the investment and he is talking about my ppor which I currently conduct the home online business from. Hopefully an accountant can chime in and make sense of the above
     
  18. MikeLivingTheDream

    MikeLivingTheDream BCOM MCOM MTAX CPA CTA Registered Tax Agent

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    yes it is horridly confusing. It is why a CPA or CA or CTA is required to have minimum CPD hours. Mario working out at Mount Druitt might be cheap but a good chance he isn't up to date.

    Ask the accountant to look at Section 118-190 (1) of the ITAA 1997.

    As TerryW says TD 1999/71 provides the guidance on that. Don't know if it was a taxtip but anyway that ruling provides clear guidance on the matter. But in this case it well may be too late.
     
  19. bfhoon

    bfhoon Member

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    Can anyone shed some light ? I'm seeing my tax accountant tomorrow so was hoping to at least gain a basic understanding?
     
  20. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Shed some light? It is all explained above. What aspect do you need info on?