We have a property approx 7yrs old in a good rental area – rent $250pwk. If we sold the property now, we could realise $100k capital gain. We are looking to retire in the next few years, do we sell or hold?
The property is owned 50:50, however I am on a 47% tax bracket, but my husband is only on 20% bracket. My capital gain contribution would be considerable.
The property is currently not cash flow positive, because we have an interest only loan. However, due to the sale of the family home recently, ($80k gain) we could reduce this loan and change it to P&I which would probably make the property cash flow positive. Appreciate some advice.hi
not sure why you would want to sell.
unless you want the money and run.
I’m not a great believer in p&l i’m an interest only for tax reasons person.
you sold the family home so what is your present primary residence, if this became the primary residence and was held for a certain time (accountant can tell you how long) then the capital gain will be reduced as far as I know.
But all of my posts are for information only and your own due diligency are reguired.here to help
I wouldn’t sell either. If you have $100K equity and you sell your CGT bill will be at least $25K, I’d imagine (not knowing your full details). You can unlock 80% of the equity using a loan at live off that to prop up payments.
Not sure what you mean by making the loan P&I will turn the property positive. It’s still basically the same amount of interest- at least for a little while until the principal repayments start to “dig in”.
I’d pay the $80K into the loan or into an offset account, turn it positive and then you still have access to the $80K plus the other equity if you want/need it (assuming you have re-draw or offset)
Hope this helps.
Megan
http://www.propertyhub.net
Your Investing and Developing Information Hub.Your question can’t really be answered by anyone until they know the full picture. You could be 83, 53 or 33 years old. What are your accom. plans now that the family home has been sold ??
As a general comment though, it is normally preferential not to trigger a CGT event until retirement, so as to reduce the relevant party’s marginal tax rate right down. Get it down low enough and the CGT might be very small.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
As you on a higher tax bracket you should look at changing the ratio of ownership it may cost you the stamp duty again but calculate your benefit on the long run if there is any, with your loan IO is usually the best option however there are ways of minimizing your liability without loosing the accessibility to your funds. If you like to discuss some option you can give me a call on 0438 985 708
Hi
i was thinking along the same lines as Dazzling,other things to consider re retirement and waiting till then to sell are
are you expecting to get the pension or part pension as there will be implications there.
regards westan
http://www.nzpropertytogo.com
check it out !Originally posted by esaar:As you on a higher tax bracket you should look at changing the ratio of ownership it may cost you the stamp duty again but calculate your benefit on the long run if there is any, with your loan IO is usually the best option however there are ways of minimizing your liability without loosing the accessibility to your funds. If you like to discuss some option you can give me a call on 0438 985 708
Changing ownership may trigger CGT. However in some states it may be possible to avoid stamp duty (and CGT) when done between spouses.
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
I only ever sell if I can get a better deal somewhere else.
CATA
Asset Protection Specialist
[email protected]Remember your will have a CG issue if you sell whilst still working, and if there is not the need to sell do not!
Property Acquisitions for developers and investor from; Kevin
You must be logged in to reply to this topic. If you don't have an account, you can register here.
