In Steve’s latest book he mentions don’t be afraid to sell to invest in better cashflow properties. We have a set of 5 units owned for 6 months, each unit owes us about $90,000. Thinking of spending $10,000 on new kitchen etc and strata titling and maybe selling off for minimum of $130,000. What happens with capital gains if you sell under 12 months.Do you still lose half of profit if you reinvest straight away?
julie edwards
J Edwards,
Firstly, I responded to this question of yours once before, as did a few others, perhaps you could do a search and revisit and re-read these answers.
But for the record, I told you then, and I will do so again now, YES YOU WILL LOOSE HALF OF THE DEDUCTIBLITY (that is, you will be taxed on the full 100% profit) through CGT if you sell under 12 months!!!! This is REGARDLESS of how you use the proceeds from the sale. Seriously, if it were that simple, don’t you think investors would be doing it all the time??? Ultimately however the choice is yours, and no-one can make your decisions for you.
Finally, if you are thinking of selling to buy cashflow positive IPs in today’s climate, I suggest you do your homework first, because such are hard to find, and you don’t want to put yourself in a situation of paying so much CGT only to find yourself in a worse situation because cashflow positive properties with good returns (and any kind of growth potential) are so difficult to find (true, not impossible, but definitely difficult in many parts of Oz).
Jo
Hi Julie,
Here is the other thread that Jo is referring to. I’ll lock this to keep the board ‘tidy’
https://www.propertyinvesting.com/forum/topic/13242.html
Derek
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