Hello,
Australian tax question about paying tax on money earnt from line of credit.
If I managed to accquire a few properties and then down the track and then each year pull out cash from property equity to provide my annual income, would I need to pay tax on that or do I just pay tax on the capital gains when eventually selling the property?
Regards,
Mason BatleyNo. I don't think you would pay tax, however on the other side of the coin, your expense (interest capitalised for the draw) would obviously not be tax deductible.
IMO you would need to be careful that you have enough equity for your intents and purposes….so you you don't end up killing the golden goose/geese altogether with compounding debt.
I'm with Michael on this one. You are borrowing money for your own purposes hence interest wouldn't be deductible however you need to watch that you don't over borrow.
Right. You have to be careful about borrowing more money. As you are already in a critical position. Your investment is not tax deductible.. So make decision thinking more than once. Wish you best of luck.
No tax on borrowed money, but interest would not be deductible as others have mentioned. So a way around this may be to live on the rents and borrow to pay the other loans – talk to a good accountant.
Also a ps – it is getting hard to get "cash out" these days, including access to equity via a LOC. so don't rely on this method too much
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
You must be logged in to reply to this topic. If you don't have an account, you can register here.
