I’m two thirds of the way through reading Rich Dad, Poor Dad and have a question (and I realise that this forum is not a substitute for proper legal advice – I’m just getting my head round this whole space ATM).
p100 says:
“For example, section 1031 of the Inland Revenue Code, allows the seller to delay paying taxes on a piece of real estate that is sold for a capital gain through an exchange for a more expensive piece of real estate. Real estate is one investment vehicle that allows such a great tax advantage. As long as you keep trading up in value, you will not be taxed on the gains until you liquidate. People who do not take advantage of these tax savings offered legally are missing a great opportunity to build their asset columns”2 questions:
Q1) This book is related to laws in the USA. Are there equivalent “trading up” laws in Australia?
Q2) What is the point of continually trading up? (as Robert) goes on to hint is ‘good’ (good being my words).
Thanks in advance,
Regretfully the strategy does not apply here in Australia.
There are no exemptions to CGT in relation to buying and selling property.
Whilst depending on the length of time the asset has been held may mean CGT will be charged at a concessional rate it will still be charged.
Book should be taken with a grain of salt.
Richard Taylor | Australia's leading private lender
Hey Chiz.
I agree with Richard…. and disagree!
Our taxation, superannuation, and many other laws bear little relation to those in the USA. So there's info in this book that does not apply to us as Aussies in Australia, buying and selling real estate.
HOWEVER there is a whole host of mindsets and concepts that are absolutely relevant. I have read many of Kiyosaki's books, and learned heaps!
In my reading, by "trading up" he is talking about someone who sells maybe a basic 2 bed 1 bathroom house, and then buys a 3 bed, 2 bathroom house. Or maybe goes from buying a house, to buying a duplex pair, or even small block of flats. ie real estate that is a better investment in dollar terms, ie return on investment.
Further, I paid good money to go to a seminar he did in Australia about 5 yrs ago, and he included a couple of (Aussie) speakers to talk about legal and accounting matters in Australia. HE KNOWS that such info is different overseas too! But I learned enough just about holding property in family trusts, to pay for my course many times over. The only way it wasn't a good investment, is if I didn't act on the info when investing in property!
Regards,
quickchick
Thanks for taking the time to answer Richard and quickchick. I take you point about investing in training / knowledge before I step out and buy my first investment property.
I read the info on “Ten disadvantages of Cross-Collateralising your property portfolio” on your web site Richard. Interesting. Thanks.
Chiz
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