Hi guys.
Just wondering .
If I sell a property I've only owned 3 mths via vendor terms , would I have to pay tax on that sale ?
Theoretically I haven't actually even sold the place as it stays in my name until it is payed out in who knows how many years time. So that time is the official settle and of receiving any profits I guess is that right or ?
Cheers
There are a few old Tax Rulings on these. Do a search on the ATO site – probably from 4 to 5 years ago now.
I read them at the time, but forget what the result was now. I think you are only taxed on the profits as it is obtained, but you should check.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
Thanks Terry.
Yeah see that's the thing isn't it.
Although you can work the sale so that the deposit is worked into a profit in a sense you haven't actually physically even obtained any profit at the point .Cheers
Also be wary that it is often the date of the contract which is important, not the settlement date. That is, if you have sold at a profit, the contract was entered into today but doesn't settle/transfer for 3 years, you may still be liable for tax on profits for this financial year.
It will be dictated by the contractual terms of the sale. Unless you carry on a property business or you are doing this as a one-off profit-making undertaking, any profit on sale will likely be taxed under CGT. If so, the date of the contract is when the sale is deemed to have occurred. Because of this, it may be worthwhile to use an option to structure the transaction to defer the taxing point. The purchaser is protected by the option because they can be given the right to exercise. Also, if the option is exercised after 12 months, you may then be entitled to the 50% CGT discount, which you wouldn't qualify at the moment because you have only owned the property for 3 months.
Best to get a property savvy accountant involved before you sign anything for the sale.
Eddie
[email protected]Thanks for the replies guys.
I think Eddie's right on that accountant , best check it all out thoroughly first .
Wonder where all the wrappers are and how they do it , great solicitors and accountants I spose .Cheers
As Eddie mentioned it depends on if it is treated as a business.
We have a separate Company that's sole purchase for establishment is to provide Vendor Finance and are Taxed under the emerging profits rule.
Richard Taylor | Australia's leading private lender
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