Forum Replies Created
If you are doing a cosmetic reno only, then no, you can't claim any GST, and you don't remit any GST on the sale.
If you are doing a substantial reno, you could be creating a 'new' building for GST purposes, and you would have to remit GST on the sale of this building. THis is because it would be deemed a new building under the GST Act. With a substantial reno, you would be able to claim GST on tradies, building supplies etc.
There's nowhere you can 'hide' assets.
However, a discretionary trust can provide asset protection. The family courts have in past cases 'looked through' the trust t osee the beneficial owners of the assets, rendering the trust (in that particular case) next to useless.
The best advice I can give is don't get divorced.
Agree with Scott, if only you had this in place before signing the contracts. Setting up trusts and transferring now means you will incur two sets of stamp duty, per property.
CGT in trusts is determined by the beneficiary. If the benfisiary of the capital gain is a company, then no discount is available. If it is distributed to individuals, then the discount is a allowed, if the asset has been owned for longer than 12 months by the trust.
As Terry stated, they can't take money out of their superannuation unless they meet a condition of release.
If they created an SMSF, they wouldn't even be allowed to buy the property from the individuals, as this would breach the related party rules.
We last moved 15 months ago, to the 'forever' house. Or maybe the 'forever until we retire and move to the beach' house.
I'm ashamed to say we still have books and other bits and pieces in boxes!
Manos, don't let the comments about Strata holdings put you off. Our first purchase was a small unit in a coastal town, and it is still our best decision. The strata don't bother us, and it is handled professionally and it has never been an issue.
A little later after buying this, we looked at a strata unit in the city, and decided against it, because it was managed by the unit holders (rather than a manager) and the boundary fence was falling down, so it depends on the individual circumstances.
I agree 100% with Erica. Sometimes bad advice – albeit well meaning – can get us off track. Unless your family knows what they are talking about, don't discuss your plans with them. My mother would have a heart attack if she new how much debt we had…
I see you wrote that you don't want to own the units, instead a company would hold them. IN that case, then you won't get any tax deductions. As Terry pointed out, the tax deductibility of interest in a unit trust is because the individual has borrowed to buy units in the unit trust. The unit holder gets to claim the deduction.
Purchasing the unit trust documents could be done for as little as $250, however any accountant or solicitor worth his/her salt would want to make sure that the structure / setup / unit holders are correct for you, your family and your situation. This advice costs $$, but has the potential to save you plenty of $$ down the track.
Is the trust registered with a tax agent? If not, the date for lodgement could be as early as 31 October.
If you are registered, it could be as late as 15 May. Check with your accountant if you are registered, and he/she will be able to tell you your lodgement date.
Points 3, 4, 5, 7, 8, 9, and possibly 6 are not unique to this type of arrangement. Item 2 is available in standard unit trusts.
It's always hard to tell, but from the information you have provided, it looks as though you have been overcharged.
The trusts and company could easily be done for half of what you paid, and the SMSF for a third of your bill. It does depend though, as Jac said, on how good your record keeping is.
Where are you and your accountant located?
Hi Silicon,
As you had another PPOR, my first post is correct.
Yes, you can, but as Terry points out, you will pay CGT on the sale.
And you can't sell it at a discounted rate, as the CGT will be calculated on the market value at the time of sale.
I agree with Terry, it's not worth it.
Hi Silicon, Just re-read your post.
If you had another PPOR, you are liable for CGT only for the rented out portion, as I mentioned above.
If you didn't buy another property, this property can still be your PPOR, and no CGT calculations are required.
In this instance, it might be better if it was not your PPOR, as it looks like yo uwill trigger a capital loss, and you will have this loss to carry forward to offset against future capital gains.
As Joint Tenants, everything is split 50/50.
In your situation, the cost base for CGT purposes is actually the value of your property at the time it ceased being your PPOR.
Yes, you should have had a valuation done at the time the property was rented. You would need to speak to a valuer / real estate agent to see if they can do a retrospective valuation for you.
If the valuation is higher than the sale proceeds, then you have made a capital loss, which can be carried forward to offset against future capital gains.
An initial; building / pest inspection is actually a cost of buying the property, and is not tax deductible. Instead, it forms part of the cost base for CGT purposes.
You could claim the depreciuation schedule cost
Here's the relevent legislation; s118-145 ITAA 1997
(2) If you use the part of the dwelling that was your main residence for the * purpose of producing assessable income, the maximum period that you can treat it as your main residence under this section while you use it for that purpose is 6 years. You are entitled to another maximum period of 6 years each time the dwelling again becomes and ceases to be your main residence.
That says to me that you must move back in to re-trigger the main residence exemption. Simply ending the tenancy is not enough to continue treating the house as your PPOR, in my opinion.
Were you living in the unit before you bought the country house?
I was told that by using the equity to buy house I would still be able to keep the pension.
Was it someone at Centrelink who told you that? That doesn't sound right to me, as what matters to Centrelink is the ASSETS, not how they were financed. Changing the loans, from my knowledge, would make no difference.
If I was you, I'd contact Centrelink and advise them of your situation.
learning curve2 wrote:Thanks TerryI was just after clarification on the CGT aspect.
Great news to hear that I can leave the property vacant and not have to move back in myself after the current tenants leave and still bequalify for the exemption when I eventually sell it.
Thanks again for the advice
Sorry to burst the bubble but that's not right.
You can only leave it indefintely and still call it your PPOR, as long as it never earnt income.If it was rented out, you must move back in within six years for the property to remain CGT free.
You will need to move back in after the tenants move out, to keep the property CGT free.
learning curve2 wrote:To leave it untenanted for less than the 3mths.For example, tenants out by early January, leave it vacant for say a month and then start to re-advertise for new tenants, so all up it is left vacant for say 6 weeks (saying that it would take 2 weeks to find new tenants). Would that be seen as being a sufficient amount of time to the ATO?
I think we are talking about two separate things here.
Once the property earns income, the clock starts on the six years. To re-activate as your main residence, and be exempt from CGT, you must move back in within the six year timeframe.
If the property is NEVER rented, you can leave it empty indefinitely and it can still be your main residence.
In your situation, you would need to move back in within six years for it to be CGT free.
