I was reading an article about offsetting capital gains tax if you purchase a more expensive home with the cash accumulated from the sale of the original property.
Thank you
Michael collins
Michael C
This rollover relief only applies in America. Robert Kiysaki talks and writes about it but it does not apply in Australia, he is from the US. In special cases such as compulsory acquisition rollover is allowed otherwise it is only available to active assets of a business and it specifically excludes assets that have been used to produce rental income section 152-40(4)(e).
Julia Hartman
[email protected]
http://www.bantacs.com.auThank you for that it is greatly appreciated as I was becoming confused when this idea was raised.
Michael collins
In the US it’s called a 1031 exchange (or like-kind exchanges), but here it’s not really avalible (as per Julia’s post).
Rgds.
Lucifer_auYou can do various things to reduce your CGT by reducing your income for that year. eg. prepaying some interest on investment properties, those 100% capital guarranteed share funds etc.
Terryw
Discover Home Loans
Mortgage Broker
Click below to email meTerryw | 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
Terry can you please explain what you mean with regard to your comment as I am sorry but I do not follow.
Thank you
Michael collins
Hi Michael
The CG is just added to your other income for the year, so the rate will be higher if your income is higher. bringing expenses forward will help reduce your income, so this will reduce the rate you pay on your CG. If you had $500,000 worth of IP loans, eg, you would pay about $30,000 per year in interest. So if your income was $30,000 and you prepaid the interest for next year, your taxable income would drop to nil. so any CG would be added to $0, and you would save tax. of course, it would be hard to prepay such a large amount, but if you had a large gain you may have some cash lying udner the bed. or you could even borrow to pay the prepaid interest. of course, you have to be careful, as next year you would have few expenses, so your property may make a huge gain, and you will have to pay more tax.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
Click below to email meTerryw | 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
So what your saying is that you can actually prepay your interest on your other IP loans it will in turn decrease your income tax bracket? or CG tax level? Does this make any difference if your purchasing it through a business or personal?
I still see no benefit in paying interest in advance to decrease tax when you can buy another property or two and increase income. Why lose the use of every dollar when the maximum you can save is 47 cents (if your structure is bad) in each dollar?
By the way, you can have your tax apportioned weekly, fortnightly or monthly so you can use it to make more money. This is a more effective strategy in my opinion!
Robert Bou-Hamdan
Mortgage Adviser
http://www.mortgagepackaging.com.auFREE Finance-Related Newsletter – Click Here
Comments made are of a general nature and should not be construed as individual advice.
© 2004 Mortgage Packaging Pty Ltd
You must be logged in to reply to this topic. If you don't have an account, you can register here.
