e.g. Buy for $300,000
Sell for $300,000

Cost base is $300,000 plus all costs not claimed such as stamp duty, lawyer fees, estate agent commission etc.

This could be say $40,000 So you would suffer a capital loss of $40k in this example. This cannot offset income but can offset future capital gains.

Losses are applied before the 50% discount too

So $40k carried forward as a loss.

You then make $80,000 in capital gains for shares held more than 12 months

The loss is applied first so the gain will be $40k then the 50% discount making the gain $20k and this is added to your other income.

Nope cannot claim this as it is a capital cost.

MsTrump wrote:

Thanks, Terryw.

I’m looking for any information that would tell me how I could minimise land tax with my next purchase (i.e. how to structure the ownership of the next IP, and the next one, and so forth), what the future tax effects would be (e.g. how a property owned under a Trust would be different to that owned by an individual – future CGT, negative gearing, claiming losses, income rules, etc.).

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In this case you need personal advice from someone qualified to advise on land tax – a registered tax agent or a solicitor. There are no books on the topic but there are some good articles around – technical stuff for lawyers and accountants mainly.

But all you have to do is to look at the land tax act cited above.

• This reply was modified 9 years, 4 months ago by  Terryw.

What in particular do you want information on MsTrump?

If it is trusts and land tax in SA then first port of call should be to Revenue SA – the govt department responsible for administering land tax
e.g.
https://www.revenuesa.sa.gov.au/taxes-and-duties/land-tax/land-held-on-trust

Then have a look at the law
Section 13 of the Land Tax Act 1936
http://www5.austlii.edu.au/au/legis/sa/consol_act/lta193690/s13.html

tanner892 wrote:

I think you would be in trouble under strategy 1 when it comes to the main residence exemption, as it looks to me like purely being a profit making scheme.

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e.g. TD 92/135
Income tax: capital gains: is the main residence exemption relevant when the proceeds of sale of a dwelling are treated as income under ordinary concepts?
1. No. In cases where the sale of a dwelling gives rise to income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997), for example. as part of a business or from an isolated profit-making transaction, that income remains assessable even if a main residence exemption is available for CGT purposes.

2. The main residence exemption in Subdivision 118-B of the ITAA 1997 is a capital gains tax exemption only and does not extend to exempt from tax ordinary profits or business income.

Example :

A builder constructs a spec home in which he and his family reside while construction proceeds on another spec home. Any profit on sale which gives rise to income is fully assessable to the builder even if a main residence exemption is available for CGT purposes.

I recall, way back, Steve saying:

1/3 income to live on
1/3 to invest
1/3 to pay down debt.

Not a bad way to do things I think.

Asset protection involves legal advice so best to seek a lawyer. You need to carefully consider the bankruptcy act and the conveyancing act in your state. One way to gain extra protection is through related party loans with registered mortgages. But this has to be done in a commercial manner of the result will be like a wet paper bag!

Short answer is yes it may be possible.

Ash wrote:

Terry – that is what I was asking. In the case of being audited, how do people generally prove they lived there in that time? Would being able to reproduce bills showing electricity/gas/water being used along with having mail redirected to that property be considered sufficient evidence or do the ATO require some sort of other evidence?

You will have to gather whatever evidence you can. Utility connectations and usage, mail, photos of you and your possessions there, drivers licence, electorial roll etc.

Nigel Kibel wrote:

Here if you buy in a company you do not get the capitals gains 50% discount. A good accountant should be able to advise you what is the best structure.

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But often the land tax savings will outweigh the potential 5% or so in savings. Plus the franking credits could possibly reduce the CGT if income distributed to a discretionary trust shareholder and the to family members on low incomes