Buy, Renovate then sell... CGT?
- Thread starter BigAJ
- Start date
AJ,
You may want to research the tax law.
Definition of trading stock is at s70-10 ITAA 1997
http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s70.10.html
Is land trading stock TD 92/124
http://law.ato.gov.au/atolaw/view.htm?locid='TXD/TD92124/NAT/ATO'
You may want to research the tax law.
Definition of trading stock is at s70-10 ITAA 1997
http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s70.10.html
Is land trading stock TD 92/124
http://law.ato.gov.au/atolaw/view.htm?locid='TXD/TD92124/NAT/ATO'
There are LOTS of threads on here on this subject
You need to learn how to use the search function on here or use google search,
site:somersoft.com "search terms you are looking for".
site:somersoft.com "buy reno sell" turns up a LOT.
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what i dont understand is
if your doing it as a business it goes towards your income and you dont have to pay CGT?
if its your PPOR you dont have to pay CGT or as an income?
if your doing it as an IP you have to pay CGT but get 50% reduced if you hold it for a year?
is this correct?
how do you show how your doing it?
would doing it as an income increase your servicing to purchase more properties?
or the fact your buying and selling so dont have debt again until the next purchase and gaining small amounts of funds in the process for bigger deposits and higher priced houses?
in a buy reno hold refi even though you have the extra equity how is that going to help fund another property if your already at your servicing limit?
can you even access the equity if your at your limit?
would it be that you would be increasing rent, hopefully mortgage hasnt gone up more than rent has so have more cashflow
that you have lower LVR because of the extra renos so your less of a risk meaning they will increase your servicing limit even though you arent earning anymore?
if your doing it as a business it goes towards your income and you dont have to pay CGT?
if its your PPOR you dont have to pay CGT or as an income?
if your doing it as an IP you have to pay CGT but get 50% reduced if you hold it for a year?
is this correct?
how do you show how your doing it?
would doing it as an income increase your servicing to purchase more properties?
or the fact your buying and selling so dont have debt again until the next purchase and gaining small amounts of funds in the process for bigger deposits and higher priced houses?
in a buy reno hold refi even though you have the extra equity how is that going to help fund another property if your already at your servicing limit?
can you even access the equity if your at your limit?
would it be that you would be increasing rent, hopefully mortgage hasnt gone up more than rent has so have more cashflow
that you have lower LVR because of the extra renos so your less of a risk meaning they will increase your servicing limit even though you arent earning anymore?
Correct, you don't pay CGT but you do pay income tax on earnings. Bear in mind you pay CGT only at your marginal tax rate anyway (unless the additional income tips you into the next tax scale.
Correct. Your PPOR has special tax status.
Yes, correct.
As with many things at the ATO, it goes to your "intent" at the outset. Document it.
If you are holding for 12 months to get a 50% CGT discount, then it is not much of a business..... unless perhaps you did one every year for 10 years running.
It would not think that it would help servicing, but it will help you with the next deposit.
If you truely are "at your servicing limit" then you probably won't be getting another IP anytime soon, unless your next purchase is cash flow positive.
Probably not unless you are doing a low doc at a low(er) LVR.
Yes, a reno will typically increase the rent also.
