What would happen if stamp duty was abolished

Discussion in 'Investment Strategy' started by MTR, 30th Jan, 2019.

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  1. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    Each owner may have a 50% reduction for a property owned 12mth+
    Consider any exempt period/s (ie was once your home)

    If you satisfy any of these matters then third element costs may increase the costbase:
    - You acquired property and it was not first used as a home and you later used it as your home
    - Home was a place of business whether or not any costs were claimed as a deduction
    - You lived there and earned income from renting for even a night / weekend (eg Aibnb)
    Third element costs are ownership costs for which no tax deduction has been claimed.
    To use third element costs you must use a pro-rata CGT calculation method
     
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  2. C-mac

    C-mac Well-Known Member

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    Thanks everyone who weighed in on my question. Your info is super helpful and my accountant concurred with your comments.

    This helps me forecast more accurate post-tax actual profits based on different selling scenarios.
     
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  3. BuyersAgent

    BuyersAgent Well-Known Member Business Member

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    I'm no expert but have done this a few times. As per Terry and Paul's comments that is the general vibe. Reno costs straight after purchase (any improvements not claimed as repairs along the way) & Professional fees incurred in buying may also be included to raise the base cost and reduce capital gains in this way (such as Buyer's Agent fees - hazzah). Have fun collecting all those profits @C-mac
     
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  4. MTR

    MTR Material Girl Premium Member

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    One thing I think you would see happen more is more investors renovations/flipping.
    In countries like US its the norm.

    However, in Oz by the time you cough up the stamp duty in many cases the profits are too skinny from my experience, makes little sense. Abolishing stamp duty would be great for this investment strategy.

    MTR:)
     
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  5. C-mac

    C-mac Well-Known Member

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    Thanks Matt!

    I'm less nervous about selling now, after the surprisingly strong Sydney auction results over the weekend (particularly within the suburb I happen to be selling in). If this continues over coming weeks, it could be the sign that home-buyers are coming stronger back into the market to pick up the lull in local/Chinese investors.
     
    BuyersAgent likes this.