Capital Gains on Vendor Finance

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scullyman
Member
@scullyman
Join Date: 2004
Post Count: 43
July 11, 2004 - 10:07 pm
Can anyone tell me this….
If the vendor sells his property on vendor finance, is he up for the whole capital gains tax immediately.
I was thinking that if I set up a vendor finance deal with minimal down payment, the vendor then has to find the capital gain amount up front. This could be hefty if he has made a good profit.
ANy advice ?
Thankyou
Terryw
Participant
@terryw
Join Date: 2001
Post Count: 16,213
July 12, 2004 - 6:18 am
Yes I htink they would have to pay the CGT in the same year as the sigining of contracts. Lease options may be away around this.
Terryw
Discover Home Loans
North Sydney
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Supa Freak
Member
@supa-freak
Join Date: 2004
Post Count: 101
July 12, 2004 - 10:16 am
Terry is the ‘EPB’ not valid anymore?
How can you pay CGT on something that you have not recieved yet?
Richard Taylor
Participant
@qlds007
Join Date: 2003
Post Count: 12,024
July 12, 2004 - 11:01 am
Guys just posted an answer to this one on another forum but in essence you might like to refer to the attached link from the ATO on the way on which Installment income is Taxed.
Another win for wrappers.
http://law.ato.gov.au/atolaw/view.htm?dbwidetocone=05%3AATO%20Interpretative%20Decisions%3ABy%20Year%3A2004%3A1-99%3A%230027%23ATO%20ID%202004%2F27%20-%20Derivation%20of%20income%26c%20residential%20properties%20instalment%20sales%20contracts%20-%20carrying%20on%20a%20business%26s%3B
Cheers Richard
richard at fhog.com.au
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