$77k purchase
$185
$130 sale
—-
$315k

$250k profit.
take off stamp duty, agent fees other holding costs not otherwise claied,
$40k say

$210k profit
$105k assuming eahld each
50% discount
$52500 income each

So you would pay tax on this $52k
Might work out to be $10 k each assuming no other income.

Very rough estimate assumming you sell on capital account.

July is not far away, could you hold off on exchange?

i am in Japan now – 8% GST on goods is not easy to calculate and most things seem to be GST excluded on the market price.

I don’t think it will have much of an effect, initially it may be a bit of a shock but once people are used to it they won’t feel it.

Yes many issues as Andrew points out.

If it is a trading company this is dangerous.

Stamp duty at market rates.

Who owns the shares? and asset protection.

Land tax – possibly not exempt.

No 50% CGT discount.

Will you be paying market rent?

Possible FBT issues.

Paying for renovations won’t mean a full deduction as this will be a capital expense.

etc

Catalyst wrote:

  i have read that you are exempt from paying CGT if you can prove the property is your main residency for 12 months. So my thought was my brother and I would move into the rear property once completed and then sell after 12 months. 

I’ve never heard of this before!

You should get some tax advice as there are many isssues and you have left out many things. It might be better to transfer now before developing, depending on a few things.

I don’t think these expenses will be deductibe against income as the property wasn’t available for rent. They may be capital expenses and could be used to reduce CGT in the future so keep good records.

Carl, sounds like a great business idea. But I doubt you will be able to find finance as it would be too risky for the lender.

Do you personnally own any property at all? Does the company own the buildings you operate fomr? ANZ can go up to 100% LVR for commercial loans in some cases.

As for a private investor you could sell shares in the company, but sounds like you want to keep it in the family, which is understandable.

If you are talking about purchasinng another premises to operate from then there may be options – a SMSF for starters BTW the same entity should not own the building and the business.

Twistiswit why is it crazy? You still need to show you can service the loan and without other income you may not meet the requiremets.

As a lawyer and mortgage broker I must say I agree with Jamie. No 3 is not correct. I set up trusts and clients are able to get finance with a brand new structure without any history with no problems – if you could borrow in your own name then you could borrow using a trust structure.

I would be interested to know which bank this was.

Dangerous to comment when you don’t know the answer!

Gifting will result in being taxed in 2 ways.

1. CGT will be assessed on market value

2. Stamp duty will be assessed on market value

I don’t know when this wasn’t ever the case.

There are ways to structure things so that no stamp duty or CGT will be incurred and that is to purchase in as bare trustee for the child. When the child is 18 or over he can then direct the trustee to transfer it to him. Needs to be set up carefully  for this to work and you may have issues with financing it.

As I mentioned on somersoft there a many different implications as to which name you buy in. far reaching conseequences which you may not be thinking of. Changing things later will be costly and have further consequences.

You should speak to a solicitor rather than an accountant and you should also speak to a broker regarding the loan consequenccess both now andn into the future.

glengary wrote:

Good Evening everyone, wanted to ask if I buy my 1st property for $500,000 and I put a 10% deposit $50,000 to purchase the property and borrow the rest $450,000 on interest only loan, can I claim back the principal amount of $450,000 as tax deductible? 1. How does that work, do I get to claim that back every year? 2. How much would I get to claim back on $450,000 (my current income is very low only 30k) If this is tax deductible would it even be better long term to not pay 20% deposit for lenders mortgage insurance because with 10% you will be able to claim back more on your tax deductible? Sorry everyone if this question doesn’t relate to investing, I just read an article about this on the train home today and interested me.

Why not borrow the full amount plus stamp duty – say another 80k. Paying cash could mean you are missing out on an exxtra deduction of $80k x 5% =$4000 per year for 30 plus years..