Im looking to get some info on trading properties. specifically I have been advised that if you trade properties as an ongoing concern you dont pay cgt instead you pay gst as you are not investing? is this true.
Basically, if you can prove that you are in the business of trading properties and class the properties as ‘trading stock’ then yes no CGT would be payable as the houses would be classed similar to any item such as a toothbrush at a supermarket.
Unfortunately, it ain’t that simple because you must pay GST on the properties, get taxed on all the gains (where as assets owned in a persons name which have CGT payable are entitled to a 50% discount), so you will not pay CGT but will pay tax on your earning like any other shop/business. plus there are a few other issues..
Hope this has given light…
Pete
…Beware of the dreamtakers…
Basically, if you can prove that you are in the business of trading properties and class the properties as ‘trading stock’ then yes no CGT would be payable as the houses would be classed similar to any item such as a toothbrush at a supermarket.Unfortunately, it ain’t that simple because you must pay GST on the properties, get taxed on all the gains (where as assets owned in a persons name which have CGT payable are entitled to a 50% discount), so you will not pay CGT but will pay tax on your earning like any other shop/business. plus there are a few other issues..
Hope this has given light…
Pete
…Beware of the dreamtakers…
Hi Willi,
So if I had a company or trust that bought, renovated and sold properties, I would be paying GST and income tax but not CGT? I assume I would have to prove this to the ATO but could I do this when I have done say 2-5 or would I need to do say 20 to be seen as a trader? Or would it be determined by the time held for the properties?
You mentioned that there where other issues associated with it, what would these be?
Cheers,
Mathew.
So essentially you would pay more tax as opposed to claiming asa capital gain?
Hi Gman and others,
I am doing my first property trade at the moment as opposed to the strategy of buy hold rent sell on other properties that I have.
My question to those out there who might know.
IS Can I charge the company that I am sole director of , for a consulting, come administration Bill if you like for overseeing all the renovation work etc that has been done on the house that I hope to sell quickly.
Why I want to do this is because CGTax will take half my gain as I am selling the property under 12 months. Which really puts a major dampner on the project for all the effort that I have spent getting it organized. I thought it may be a way of making the project worth while and minimising the capital gain on the property.
The CG tax situation really makes me question whether it is all worth it???What do you think out there?????
Thanks in advance
Isagold
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