Can somebody explain to me in Steve’s Book “$1,000,000.00 in one year” the strategy in regards to capital gains tax. It seemed to me that selling properties so quickly cost a lot of extra tax, as 50% CGT to the full gain, while it only applies to half the gain if one owns the property for at least 12 month.
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Blush [blush2]The capital gains tax is calculated at your own marginal rate.
If you sell after 12 months, you only pay cgt on 50% of the gain at your marginal rate. This can cut down the tax payable enormously.
For example;
Your marginal tax rate on your salary is 30%.
You buy a property and sell it after 13 mnths for a $50k gain (why sell it? – another story).
You are liable to pay tax on $25k (1/2 the gain) at the rate of 30%, which is $7,500.
In reality, the whole figure is applied to your total taxable income – from wages and other I.P income, which may result in not a lot of tax paid at all.
If you are new to investing bridgebuff, I suggest you read every Jan Somers, Margaret Lomas and Noel Whittaker book you can find. All the ‘nuts and bolts’ will be explained. Keep reading and gaining knowledge.
Also, consult with a property savvy accountant.Cheers,
Marc.
[email protected]And don’t forget, tax can be minimised even further by using trust structures.
Terryw
Discover Home Loans
Parramatta
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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