We currently sold an investment property. We sold it because it was old and had no depreciation benefits – orginally we were going to knock it down and rebuild – land size 1100 – it was just costing us too much and townhouses starting coming around it so no good for a family home. Made a nice profit of $114,000 (after that bastard 2.25% exit tax) Have paid out the mortgage of $82,00 on our existing family home. Now have $30,000 left over to pay the CGT – delaying that until next March 05 – investing it for 12 months.
We eventually want to buy another property (already have another 2 flats – doing nicely) now that we have extra cash each week after paying out the family home.
Question is this…. I read somehwere about purchasing within 12 months of selling off your investment and then not having to pay the CGT. How does that work? Do you ever get hit with CGT on the 1st sale when you eventually sell the 2nd one?? The other question is the timing to find a bargain!Originally posted by doupine:Question is this…. I read somehwere about purchasing within 12 months of selling off your investment and then not having to pay the CGT. How does that work? Do you ever get hit with CGT on the 1st sale when you eventually sell the 2nd one??
I am not aware of that – perhaps you heard it in relation to the US where I believe you can rollover capital gain into subsequent properties?
All the best,
Simon Macks
Finance Broker
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0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
I think what’s called the CGT event has already happened. Regardless of any new purchase. Check with the ATO
There is the ability to roll over capital gains from one asset to another, though in Australia that is only avaialbe with certain business sales and not with IPs.
I think it is called rolling over one “active” asset to another “active” asset. However once the final in the chain of assets is sold the CG crystalises on all previous events and should be calculated at that point.
I have to warn you that i read this at the ATO in 2001 so a lot could have changed since then. The idea was that you could sell your ongoing business concern and use the proceeds to purchase another ongoing conern without paying tax (yet) with the idea that throughout the period you are “in business”.
Still none of that applies to residential investment property, though it may apply to such things as hotel businesses (not just the hotel building) or retirement community businesses (not just the units involved).
Oh and not that it is mentioned here but the word is advice as in “I will provide advice” not advise such as: “I advise you not to jump on your toes”
[biggrin] just something that bugs me (also, a lot not alot)
hmmm strange mood I’m in.[blush2]Surrey
I recall reading something similar. There is CGT relief on the sale of business assets before retirement. There are limits in amounts and time limits as well. I think it has to be within a few years of retirement.
The concessions are available for commercial properties that are owned as part of a business. eg a hotel.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi all,
Surrey is correct investment properties, where a rent is received, are not classified as active assets and therefore you are not able to ‘roll over’ or defer any CG.
It is ‘possible’ that doupine has confused the 12 month = 50% CGT discount rule. Not sure – just trying to shed some more light on the subject.
Derek
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0409 882 958
Property investment advice and researched property in quality locations available.
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