Hi
I have gone through the Renovation Toolbox course and Control Spreadsheet and can't seem to find mention of Capital Gains Tax.
Shouldn't this be concidered when calculating Nett profit from a reno deal or am I missing something?
I'm planning to plough all profit from one reno into the next deal. As far as I can see, I would need to take each sale as a CGT event and put aside the appropriate CGT amount. Thus my profit (as calculated in the reno tookit) is reduced by 40% (unless the property is held for more than 12 months of course).
As this is such a significant hit to profit, I would have expected it to be in the deal evalution calculations.
OR as I said, have I missed something?
Thanks
KentonHi Kenton,
Are you by any chance considering selling your renotool box? Sorry your profile is not set up to receive Private Messages!Thanks
Hi,
Normally when doing renos as a business, there is no capital gains as the entire profit is treated akin to business income (that is – like salary for businesses).
When doing renos as a private investor you could probably do one or two every few years, but after that you would have an argument with the ATO to say you were not in the business of renovating for profit.
That said, everyone has their own tax situation, so it is hard to know how much tax you will need to pay.
Nevertheless, tax should be a consideration and I will ask Dean and Elise to include it in Reno Toolbox II which is currently in production.
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
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