Hello –
Would appreciate any advice on our situation. We are currently a one income family as I was on mat leave but am now setting up my own business as a sole trader. I imagine it will be at least 6 months before I produce an income.
My husband earned just over $100K LFY.
We have an investment property that is in my name only. It is interest only and we lose about $2500/year.
Would it be better to transfer the property into my husband's name so he can claim the deduction? is this easy to do?
Also – we have made about $175K capital gain on the property in 5 years but it is coming up to the 6 year tax limit before we have to pay CGT. Should we sell before then and invest elsewhere or just sit on it for the long term and "hopefully" watch it grow?
The banks will not lend us much if we borrow against the equity as we are on one income with the existing loan of $220K.
Thanks for your advice.
Transferring an investment property will most liklely trigger stamp duty, depending on which state the oroperty is in.
For the 6 year rule, you have to have lived in the property before renting it out, and not be claiming another main residence. Do you meet those criteria?
Hi, I'm new and from Melbourne.
I put a deposit on a piece of land and settlement was just a few weeks ago. The agent I bought it off was going to flip it for me before settlement but it never eventuated. I was going to sell the land but I would not be entitled to claim the 50% CGT if I sell within the first year. Now I am thinking of building on it and renting it out however I don't know if I will be able to borrow enough to build. Another alternative may be to borrow to buy a house to rent out whilst I save enough to build. My investment loan has a condition that I have to sell or build within 12 months. Can anyone please advise as to what I should do?
Dan42 – thanks. Yes i meet the criteria. I lived in it for 6 months whilst I renovated it when I first bought it in Nov 2005. It is in Melbourne.
Chiller – you might want to post your question under a new topic instead of under my question as you will more likely get more responses.
sassy75 wrote:thanks. Yes i meet the criteria. I lived in it for 6 months whilst I renovated it when I first bought it in Nov 2005. It is in Melbourne.Hi Sassy,
Just thought I'd check re: 6 year rule, as a lot of people get this wrong. But it looks as though you can sell CGT free. What you may wish to look at is if selling and buying something else in your husband's name. THe issue here is that buying and selling is expensive, with agents fees on the sale and stamp duty on the new purchase.
The other option is to transfer the current property into your husbands name, but this I believe will incur stamp duty. (I'm not 100% sure as stamp duty laws differ in each state. Best to check.).
The question that you will need to ask is whether the stamp duty payable will be less than the expected tax savings.
Thanks Dan…will check it out
No Stamp duty when transferred between spouses in Victoria
Awesome…thanks cmason
Hi Sassy,
If you sell and buy again later you are up for exit costs and then entry costs which can get up around the 10% mark total across both properties and this can take a fair while to earn back, so trying to hold if you can afford it is my suggestion, its all about your cash flows and possible future lending options.
Once you get the income going you will have some options for lending (although they'll fall into the low-doc category and tend to be more expensive) so don't be too discouraged as there are always options (as long as low-doc lending remains).
Then once you get your financials ready over the coming years you can get yourself into the position you want.Best of luck with the new venture.
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