Say I have a property worth 200k with an IO loan of 100k and then decide to refinance up to 80%, That would take my loan to 160k and I would have 60k to spend elsewhere. Now say later I decide to sell. Does the tax man consider my profit BEFORE i refinanced OR would he simply say:her profit is 40k, we tax her on 50% of that?
The profit is based purely on the sell price and the buy price. What you do in between finance wise is not a factor.
If you bought the property for $200k and were to sell for $300k, your cap gain tax would be on $100k – you pay tax on 50% of the gain at your marginal tax rate if you sell after holding it for 12 months, or 100% if you sell within 12 months, and is applied to any other personal income that you have.
Please consult with your accountant about this and how it will affect your financial position.
Say I have a property worth 200k with an IO loan of 100k and then decide to refinance up to 80%, That would take my loan to 160k and I would have 60k to spend elsewhere. Now say later I decide to sell. Does the tax man consider my profit BEFORE i refinanced OR would he simply say:her profit is 40k, we tax her on 50% of that?
Is the property an investment property or owner occupied?? If you are taking the money out of an owner occupied to purchase an investment you need to be sure you structure the loan properly so that you can demonstrate which portion is for what purpose. The same goes for visa versa, however if an owner occupied and you are increasing the loan for general use would not matter
Any loan on a property is irrelevant for CGT purposes.
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
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