Hey guys,
I really need some sort of direction here…i have been searching the forum but somehow it has confused me even more….Here is my situation:
1: I have 2 blocks of land, which i bought sometime ago(for 140K all up) but due to my ignorance, i have now repaid this loan whereas i still have a massive loan on my PPOR which bought later on.2: These blocks have basically doubled since i bought them 3 years ago…
Requirements are 2 folds:
1: I really want to reverse my situation where i really want to pay off my PPOR using the C.G experienced by the vacant blocks and be able to negatively gear the vacant blocks(as i intend constructing them soon).
2: Also as my brother is also contributing to the asset we will also like this to be some form of joint ownership.
Thus i having been thinking on the lines of selling and then rebuying these block of lands. So in a way:
1: Sell the block of land for 280K and use this money to pay off the PPOR.
2: We re-buy the blocks of land and get a seperate loan on them. I am aware of the costs of Capital Gains tax and Stamp Duty but these will be offset in 3 years by the negative gearing.
3: I will like to structure the deal in a way that will give us flexibility in terms of being able to change our ownership %ages….
So i have thinking more on lines of ‘tenants in common’. Trusts really seem too much for me….
Can someone please giude me as to how i should go forward with this…
Please let me know if i left anything vague…
Thanks,
hkr
I believe in order to be able claim deductions for an asset, it needs to be income producing eg. receiving rent. Maybe it can be structured to be able to do so, but at this stage I think costs are capitalised not deductible. Being held for capital gains alone is not sufficient to be able to claim immediate deductions, you receive the benefit as a reduction of your capital gain.
Rhys
Not quite. There is some latitude for claiming holding costs if construction is intended – see an accountant.
Perhaps the 50% share you sell to your brother will allow you to pay down $140K into your PPOR loan immediately?
I am not sure that selling them to yourself is possible? People usually use a spouse or a trust to achieve this. Does anyone know?
Cheers,
Simon Macks
Residential and Commercial Finance Broker[email protected]
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.
Yes,
I am fairly sure of deductibility of interest as i intend to construct fairly soon and have already started researching on it….Although i thought there should not be any issues in being able to sell to myself and my brother….as tenants in common…
can anybody clarify…
My only concern is that the ATO will see that the only benefit to yourself of doing the transaction to yourself will be to save tax – on this basis it can be disallowed?
Any experts?
Simon Macks
Residential and Commercial Finance Broker[email protected]
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.
So is selling 50%of stake possible without my having to sell and rebuy the rest of the 50%…
I thought the only way i have is to sell the whole thing and then buy jointly….
Yes I believe so.
Please don’t rely on my thoughts here. You need to speak to an accountant and a solicitor and get 100% accurate advice.
Cheers,
Simon Macks
Residential and Commercial Finance Broker[email protected]
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.
Hi hkr
I realise that you feel that trusts seem too mcuh for you but you shouldn’t discard them on that basis alone. There may be some scope for what you are trying to achieve.
Discuss the problem with your advisor (accountant/solicitor/investor) and explore the various solutions prior to your final decision.
i really want to pay off my PPOR using the C.G experienced by the vacant blocks and be able to negatively gear the vacant blocksAre you intending to negatively gear the investment properties or are you wanting to have them CF+?
pr
Thanks Pete,
The intention is to use the cash freed up in rebuying to pay off the PPOR. But i really dont want to get rid off the IPs, so will like to rebuy them…
I will really be paying stamp duty again but that will get offset by the negative gearing…Any good books which can give me more knowledge n trusts. I believe there is Trust Magic by Dale GG…any other source which anybody else will like to recommend…
hi hkr
sorry put i won’t post on here why and how you do what you require. you need to talk to a accountant that will look at the original entity that bought the land.
It is not as simple as you may think and if wrong the ato will look very unfavourable on one person buying out the other,trust members being removed from trust, and directors buying out other directors.
It is an area of capital gains, loss allocation, etc.
and you will need professional advice.
As for rhys13 no you can claim a tax deduction if the purchase was with in a company and the company had an inention to sell the item and your accountant can claim them in the year that they occur.
These are all accountant issues and my post are not ment to be seen as tax or financial advice and should not be seen as such.here to help
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