Forum Replies Created
Jenny
Be careful with your tax treatment .
Firstly CGT only applies to a capital purchase sold after 1 year of being held , technically you are selling on day one ( buy propery and wrap the next day ) but are receiving paymnet of the monies over time so CGT does not apply ( if it did you would be up for tax on whole profit on day one ) .
Also your tax prfoit is not based on cash flow received ( $ 18 k ) but on profit on Sale ($165 less cost of $130 = $35 k less purchase costs of approx $7 )= $28 k that is taxable as it is received .Also regarding stamp duty , you are purchser of the property not the client , you name is on title so the first home buyers exemption ( if applicable in NSW ) does not apply to a wrap property .
Bob
I think the scenario you have used is fine but your tax treatment of it may need some clarification .
The paymnet of the monies does trigger a tax issue but the actual tax is based on the profit of the sale over the period of when you receive the paymnets . The profit is Sale less cost of sale ( ie $130k less $100k ) equals $30k profit, this is spread over the time you receive the profit , when you receive this is when tax is payable .
Therefore you received $50k of the $130k price so you would be up for 50/130 of $30k profit in the first year . As you receive repayments a portion of each repayment received is profit and triggers a tax amount .
Tax is not based on cash flow as you had shown it takes into account sale price less cost and then you apply this as you receive it .While I am not a tax accountant this seems to be consistent with my investigations on this matter .
Good Luck .Hey everyone thanks so much for your input and opinions on this matter . This is exactly as I see this forum being used .
From all the replies to my taxation query I now have enough information and contacts to establish a stable and and reasonable position to work from .
Thanks everyone . Your terrific !!!!!!!!!
