Hello My name is Tyler
I was recently looking at a set of double storied 2 beed room units 6 to be exact. I was wondering if I sold 2 or 3 to turn it into a positively geared investment what taxes would the sales be subject to?
Thanks Heaps
Tylertalk to an accountant for exact numbers but basically:
Purchase cost plus any costs to strata = total /6 for price per unit
eg price per unit = $300K
sell for $330K
Then your profit per unit is $30 K. Depending on how long you held them (>12 months 50% CGT reduction) and what your current tax rate is will dictate your final tax bill.Unfortunately you cant just take the profit from half and apply it to the remaining loan and not pay tax. Something about avoidence there, but good on you for trying!!!
Mick
PS before thinking about the tax as part of your DD, you need to check with council to see if it can be a strata complex. You need to consider the fees in doing so, the potential need for any fire walls etc. If it was easy to just sell off 2 or 3 then why have the current owners not done this? Be careful of paying 6 times a single unit price when they are not yet strated. If you do basically then there may be little profit left in the deal for you. Watch your numbers carefully.
Also remember with a non strata block if you substantially renovate them you will also incur GST on the end sale price and whilst you maybe able to claim the input credits on the materials will end up paying GST on the margin.
This will certainly effect your bottom line also.
Richard Taylor | Australia's leading private lender
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