What would you do in 2020?

100% agree. The planning around assets is critical.

Most people do not think through these issues. I know someone who only bought the top 20% of product in Sydney. The indicated that they would never sell so they did not worry about CGT impact.

Well 20 years later...wifey want to wind down...and he has has about 800-1.5m trapped in gains in each property.

One of their houses requires a lot money..and the plan to sell. But the issue they don't want to give up their jobs either. These are under their names but on 1.2m profit 600k ti added to their name. They are annoyed they will on;y keep about 900k out of the 1.2m.

If they split these up into cheaper properties it would have been easier to bring down the taxable component.

 

if i turned back the wheels of time I would balance the portfolio with a good spread of shares

property in retirement is not passive but I am not really complaining .... Property has given me a great life style and financial freedom

just should have tweaked it...what I am telling my children

 

I don't quite get how these are cautionary tales.

They made $1M by investing in quality assets - great result.

They would be more annoyed if they invested in crap assets with little returns.
Perhaps there is this alternate universe where they make the same returns and pay no tax - so what ?
There are hundreds of other scenarios, some better and a lot worse.

Should be delighted about the 75% they are keeping - I know we are.

 

No wrong or right, as long as you are making money

have learnt not to be fanatical about strategies, one shoe does not fit all

 

I'm not sure that is correct.

I thought it was just total UCV less the threshold - the number of properties makes no difference.

 

Agree.

I'm just not discounting a strategy because I'll have to pay tax on the $1M it makes me.

People are very funny about tax - I've had staff reject a large bonus because it'll push them up a tax bracket or two.

 

Ditto
I dont understand this either

 

If I had my time again I wouldn’t buy resi.

 

I pay a **** load of all kinds of taxes. But I also make a **** load too. There is no way to avoid paying taxes the more you realise gains to live a great lifestyle. You absolutely can minimise tax, but not avoid paying more tax overall.

Those who pay little tax and are obsessed to to try and save every last cent, I can guarantee you are making much smaller profits than those paying more in tax. It's common sense. At the end of the day, whatever works for the individual. There is so much dick measuring by some you gotta wonderful what it's overcompensating for.

 

OP, you have currently have $2.3M allocated to residential real estate. You don't mention how much super you have, or how that is allocated, but it seems clear that your asset allocation skews very heavily to residential real estate.

Do you both contribute the maximum $25K each to super? Utilised your non-concessional contributions to super?

Outside of super, have you considered diversifying into equities (domestic and international), commercial property (via REITs or unlisted funds), fixed interest etc?

 

Sorry was typing on the phone and got distracted, the main point I forgot to add (which makes all the difference ) was that if you can split up 2 x $600k properties through different entities and then lower the total amount of land tax compared to 1 x $1.2M.

eg. Scenario 1)
Steve owns 1 x $600k, ABC Trust owns 1 x $600k (land value). Total land tax in VIC = 975 + 975 = $1950

Scenario 2)
Steve owns 1 x $1.2M (land value), land tax = $4575