Hi everyone,
Just have a question:
Is it possible to delay paying CGT by puting your gain into a similar investment. I have vaguely heard of the idea but I dont know anything about it.
Thanks, Kelly
Hi there
I think you may find it is more possible to delay capital gains by rollover into a similar investment in the US.
It is also possible to do in Australia – but in fairly limited situations for example, if you lose an investment property in a bushfire and receive a payout from your insurer – strictly speaking you have disposed of an asset – which attracts capital gains tax. You can delay the payment of tax by rebuilding the property – and claim rollover relief – and only pay capital gains when you do actually sell the property.Originally posted by kellylock:Hi everyone,
Just have a question:
Is it possible to delay paying CGT by puting your gain into a similar investment. I have vaguely heard of the idea but I dont know anything about it.
Thanks, Kelly
That really is an American strategy and not possible here.
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.
In the US it’s called a “1031 exchange”.
As long as you keep re-investing the cap gain into more expensive investments you defer paying the C.G.T.Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
Is it true that you can have property in a self managed super fund and if the property is sold after you reach a certain age, no CGT is paid?
Simplest delay is to enter contract on 1 July, that way any CGT won’t be payable until after that financial year’s tax return is lodged. Might be able depending on when you have to lodge return to get 20 plus months before you pay
I have an article written by Noel Whitaker saying you can put your Capital Gain into super and pay only 15% tax on it. If you want details on it PM me with your email address and I’ll scan it and email it to you. Personally I wouldn’t do this unless I was 50 or older.
Thanks everyone for your responses.
I knew that you could do it in the US, and I thought it wasn’t available here in Aus. (Otherwise everyone would know, hey!) But one of my friends said that she knew about some way to do it in Aus, but so far I haven’t found it.
Unfortunately (or maybe fortunately) I am not over 50 yet, so any CGT I have would not go into my super.
Thanks, Kelly
For anyone who is interested in this topic, small businesses are able to get CGT deferred or tax concessions if they sell business assets (that are not investments).
There has seemed to be some debate since 2002 to have a stepped rate of paying CGT, so that the longer you hold an asset, the less you pay of CGT.
There has also been discussion to lower the percentages of CGT in order to make Aus CGT more similar to other western countries, such as UK and US.
As far as I can tell (reading reform and tax papers from government websites!) neither of these have yet to occur.
Of course there is CGT reductions for share investments, but not real estate investments. There are also CGT rollovers for some things, like transfer of assets through marriage settlements, the destruction of a property (like the bushfire example earlier) and business mergers and takeovers etc…
After hours of sifting through wordy tax documents… all I discover is that, unfortunately, none of that applies to me!!!
Oh well,
KellyI would have to agree with CRJ here.
If you sold your property on say 1st July 2007 and made $200K in capital growth… You could reinvest that cash for 12 – 14 months before having to pay the taxman… The old “pay yourself first” strategy.
Yes, you would still have to pay the tax man CGT, but you would have increased your profit.
Who knows, if you’re feeling generous, perhaps you could always make a donation to your favourite non-profitable organisation.[lmao]
Thanks contrarion,
That seems to be the best strategy open to most people for making the most of your Capital Gain.
Kelly
hi everyone
Will depend on your age and own circumstances, but i am with “millions” on this one and agree with mentions made by noel whittaker and making contribution to super.
A lot of people are hesitant to lock money in super but i would rather have it locked away for my retirement than just going to the ATOThere is a way to not pay capital gains – Don’t sell! [biggrin]
Borrow and leverage off the new asset value (if you circumstances allow of course!)
Woodsman
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