I have been informed that the capital gains discount on investment property applies afer owning an investment property one year and this time commences when the contract is signed and not settlement date ie if the contract of purchase is 3 months prior to settlement this means you only have to hold 9 months and one day to acheive 50% capital gains 50% discount
Hi Always Learning,
I was not knowing about this and it’s good to know about this.
Thanks for info!
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PropertyGuRu
Hi Always Learning,I was not knowing about this and it’s good to know about this.
Thanks for info!
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PropertyGuRu
Hi Always Learning,I was not knowing about this and it’s good to know about this.
Thanks for info!
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]
PropertyGuRuProperty guru
I originally thought capital gains kicked in after one year one day until a solicitor advised otherwise this would mean the longer the contract prior to settlement the time reduces to onsell to gain the capital gains discount
I originally thought capital gains kicked in after one year one day until a solicitor advised otherwise this would mean the longer the contract prior to settlement the time reduces to onsell to gain the capital gains discountThat’s cool if some one want to sell ASAP so to save CGT will wait for only 9-10 months instead of 12 months.
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PropertyGuRuBased on the above one could in theory enter into a contract to purchase, settle say 3 months later, enter into a contract to sell say the next day and provide the buyer with a long settlement of say 9 months whilst giving him/her possession of the property immediately after exchange of the contract (and in return for this favour the buyer either pays rent until settlement time or agrees to pay an increased selling price).
Nice scheme except that I would think that it would be contravening the spirit of the rules and thus would make one liable to pay tax at the higher rate.
Pisces133
Pisces, That wouldn’t work, because the moment you enter into a contract with the new purchaser is when it is considered a sale, not the date of settlement. It is the same as when you purchase, ie date of exchange of contracts.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Point taken Terry. But what about if the sale is structed by way of option with the option holder (the future owner) paying such a hefty option fee that he is unlikely ti walk away from exercisng the option in 9 months time ?
Pisces133
Hi there,
Actually I found out this information quite by chance when I ‘asked the question’ regarding selling prior to 1 year was up and I found out that as Alwayslearning mentioned, it was on signing the contract and not settlement date.
Luckily, that contract lapsed and we were able to sign another one, that let us sell 12 months after purchasing the property (as per signing the contract) and incure less of a tax burden (which was the ‘icing on the cake’)Cheers
Sooshie []When a problem is created the solution is created simultaneously
Sounds great. Is this the case for off the plan property too. For example you can sign a contract and sometimes not settle for over 12 months. In this scenario does that mean that you could immediately sell and still get the CGT discount ?
MillaD it depends on what you mean by immediate? If it’s ‘immediately’ after settlement, and more than 12 months since you signed the contract, then yes, half CGT applies.
Cheers
Mel
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