House Sale - Reduce/Minimise/Negate Capital Gains Tax

Porker on 12/04/2023 - 17:58
Last edited 12/04/2023 - 23:25

Hi All

I intend to speak to my accountant about these matters too, but just wanted to run this situation past any informed Ozbargainers as a viability check.

I have an investment property which I bought some 20 years ago and intend to sell - the property is entirely in my name. If I can sell at the average price for the area, the Capital Gains payment is in the order of $140,000 which I'm naturally not wanting to pay.

I'm just seeing if there any loop holes to reduce/negate the need to pay Capital Gains by gifting / transferring the house to my wife.

My plan is to transfer the title to her name, with this process as I understand being possible at no/minimal cost or stamp duty payments required if it's our Principal Place of Residence (PPOR). We're not against moving into the house to achieve this status and live there for 12 months. If anyone has any other legal and sneaky ways to transfer title, I'd happily accept the advice!

With the ideal future state being that the is title fully in her name, does anyone have any insight on how her Capital Gains will be calculated? I anticipate her calculation wouldn't be against the original purchase price which she did not actually pay - I'm just not sure what amount it would be calculated against/from.

My guess would be that we'd be best to get a house valuation done at the time of the title transfer, and use that as the base in order to calculate the capital gained from the eventual sale.

Thanks in advance for any informed responses about this.

EDIT: Sorry I mistyped - the property capital gain isn't $140,000. This is the additional amount to my personal tax after 50% discount and applying 40% income tax.

Financial

Comments

  • deme on 12/04/2023 - 18:05
    +12

    I have an investment property which I bought some 20 years ago and intend to sell

    Pay the CGT after discounted by 50% for holding it longer than 1 year.

    The end.

    • Porker on 12/04/2023 - 19:02

      Could very well be the outcome :)

      • deme on 13/04/2023 - 08:34
        +10

        It's the only outcome.

        If you know or suspect phoenix, tax evasion or shadow economy activity, report it to the ATO by completing the tip-off form or phoning the ATO on 1800 060 062.

        Your forum post will nicely show intent.

    • HeWhoKnows on 13/04/2023 - 11:47
      -2

      Its not the end really.
      OP could move into the place and name it as his primary place of residence.
      However would need to live there for a number of years before selling to reduce or negate CGT.

      read here:
      https://duotax.com.au/capital-gains-tax-property-6-year-rule…

      • deme on 13/04/2023 - 14:40
        +1

        The 6 year rule is when you change a PPOR to an investment. OP already has an investment

  • DOGGYWOWWOW on 12/04/2023 - 18:06
    +5

    I'm no financial advisor but it is my understanding that you will need to pay capital gains even if "gifting" it to your wife. However, for the period where the property is your PPOR it should be CGT exempt.

    • Porker on 12/04/2023 - 19:02

      Cheers will look into it.

  • SBOB on 12/04/2023 - 18:11
    +27

    So happy to write off investment property costs/losses against your tax for 20 years, but then want to avoid paying any CGT on offloading of that investment property.

    Nothing like a bit of talking about tax fraud with the wife to spice up the marriage though, so I guess there's that.

    • Ghost47 on 12/04/2023 - 19:01
      +7

      Epitome of f you got mine, privatise profits and socialise losses, she'll be right mate etc etc.

    • Porker on 12/04/2023 - 19:09
      -5

      I suspect many are guilty of tax fraud to some degree by deducting higher amounts or items that aren't bonafide work-related etc.

      If there's a legal way to achieve a tax reduction, then I can't see how it's fraud - who wouldn't want to reduce their tax? I'm not falsifying any documents or incomes or expenses.

      If there's no legal way, then so be it.

      • coffeeinmyveins on 12/04/2023 - 20:58
        +6

        I suspect many are guilty of tax fraud to some degree by deducting higher amounts or items that aren't bonafide work-related etc.

        There's something to be said about how you are justifying your own tax fraud that you blatantly admit to further down this thread by saying things like "I suspect many are guilty of tax fraud".

        Sure mate, you do you. Don't come running to OZB when you get a "please explain" from the ATO. You've made a lot of money off this property and you're looking to socialise your tax bill. Pay your share.

        If there's a legal way to achieve a tax reduction, then I can't see how it's fraud

        Because you seem to blur the lines between "legal" and "tax fraud" to suit your narrative and it's hilarious. I can only imagine what other illegal things you do and justify it under the guise of "everyone does it".

  • Tee Rex Arms on 12/04/2023 - 18:15
    +1

    Wonder what other fraudulent activity you get up to on your days off

    • Porker on 12/04/2023 - 19:13

      Admittedly, I do claim 50% of my internet and phone bill as a deduction for my work from home situation. As the internet and phone are 'unlimited plans' and used regardless of work, technically there is no need for me to claim as a deduction as it's not an additional expense, but my tax accountant informs me that it's okay and they continue to deduct it.

      • A-mak on 13/04/2023 - 16:59

        You're supposed to calculate the hours used for work vs not and claim that percentage against your personal internet bill and similarly with phone you figure out on your bill the calls made for work vs personal and claim that percentage…

        If your accountant is saying "50%, you'll be right", they sound unqualified. 2 second google, it's pretty clear:
        https://www.ato.gov.au/Individuals/Income-and-deductions/Ded…

        • Porker on 13/04/2023 - 17:21

          Yes, I'm highlighting that I know I'm committing fraud.

  • bemybubble on 12/04/2023 - 18:32
    -1

    My plan is to transfer the title to her name, with this process as I understand being possible at no/minimal cost or stamp duty payments required if it's our Principal Place of Residence (PPOR).

    If it’s your PPOR why are you worried about gains?

    • Porker on 12/04/2023 - 19:14

      The gain is calulated also against the proportion of time spent living there verses renting. So not a case of simply converting to PPOR and then absolving the capital growth.

      • bemybubble on 12/04/2023 - 19:15

        Was it ever your PPOR in the beginning?? Or just at the end?

        • Porker on 12/04/2023 - 19:17

          Investment in the beginning to about year 10, at which point we moved in for about 5 years, then bought elsewhere and the property returned to investment.

          I bought when I was young and didn't account for the end CGT.

          • bemybubble on 12/04/2023 - 19:20
            +2

            @Porker: As mentioned above then you would apply the proportion rule. There’s a special rule if it was your PPOR first but obviously doesn’t apply here.

            I bought when I was young and didn't account for the end CGT.

            Very naive take. That’s like saying I didn’t get a job cause I don’t want to pay tax. You made money. It’s a win. That enabled you to progress further. You did good kid

  • MS Paint on 12/04/2023 - 18:40
    +3

    You can't have it both ways. All the loop holes are known by the ATO and water tight. Just pay what you owe.

    • Porker on 12/04/2023 - 19:18

      Quite astute - suspect this situation will be the case.

  • AustriaBargain on 12/04/2023 - 19:08
    +6

    Sounds like your investment has paid off big time, even adjusting for inflation. Imagine if you were renting this whole time. You should take the win and enjoy your money, and if you're leaving the city for good in retirement then pat yourself on the back. You played the game and you won. Oh it was an investment property, double win, you sell this for the payday and you still own your home. You should be popping champagne, not complaining about paying your dues.

    • Porker on 12/04/2023 - 19:19

      Cheers for the informed response. Perspective is always important.

  • Ghost47 on 12/04/2023 - 19:29

    Wth my previous comment was unpublished because I posted an Amazon link to a book for the OP?

    Anyway, in that comment I said:

    Go out and buy this book (don't forget to write it off tax somehow, just say that it's an expense related to renovating or fixing your property, I'm sure you know what you're doing), read it and come back to us with how you dodged the tax.

    The book is called "Tax secrets of the rich".

    Good luck OP!

    • AustriaBargain on 12/04/2023 - 19:41
      +1

      You must have had your own, or someone else's, affiliate tag on the link. I guess Scotty doesn't have a script to strip tags off links and replace them with their own… except that doesn't sound right, Scotty knows how to do that. Maybe Scotty doesn't want to strip URL parameters from a link just in case they are useful for the link itself. But even still stripping just the affiliate tag shouldn't be too much trouble.

      • Ghost47 on 12/04/2023 - 19:44

        That's strange, I just looked the book up on Google and used the Amazon link… thanks for the reply though.

        • AustriaBargain on 12/04/2023 - 19:46

          When you hit Amazon your cookies will apply the last affiliate tag you snagged on within the last 24 hours. I mean I've never checked but I'm assuming it physically puts it as a parameter after the link link a usual affiliate tag. If you clicked an Amazon link while not logged in on OZB then that tag would be Scotty's. If you followed an Amazon link on any other website, chances are someone put an affiliate link. It's basically the only reason to link to Amazon.

    • Porker on 12/04/2023 - 20:08
      -1

      Cheers - will look into it. I'm confident I can reduce the CGT through varies methods, just was wondering if the mentioned above would work.

  • netjock on 12/04/2023 - 19:32

    My plan is to transfer the title to her name, with this process as I understand being possible at no/minimal cost or stamp duty payments required if it's our Principal Place of Residence (PPOR). We're not against moving into the house to achieve this status and live there for 12 months. If anyone has any other legal and sneaky ways to transfer title, I'd happily accept the advice!

    I don't think this is right. Imagine if everyone moves in for 12 months then transfers it. You can't just make capital gains disappear. You might as well paint it a different color and pretend it is a totally different house.

    Your tax accountant is actually best to advise you, they've seen it all. Else they could refer it to their technical expert at CPA, CA, Institute of Tax Accountants etc. OzB is just people debating how to read legislation and guidance.

    • Porker on 12/04/2023 - 20:16

      Yes, it can't be that simple with a number of replies suggesting as such. I do intend to consult with my tax accountant.

  • MrMarket on 12/04/2023 - 19:41
    +2

    as soon as you make any transfer of ownership it trigger CGT event
    there is no way around this, just pay the tax

  • hoey888 on 12/04/2023 - 20:46
    +1

    These might not be suitable for everyone or your scenario as they are abit 'out there.' But definitely talk to your accountant or a financial adviser for further explanation

    If you are hell bent on reducing/minimising CGT tax payable consider

    • transferring upon your death (the inheritor [wife] pays CGT upon [her] future sale, not you)
    • not working in the financial year you sell property (or have nil/minimal taxable income)
    • making a pretax contribution into superannuation (subject to the contribution caps)
    • making use any (if applicable) catch up contributions
    • Porker on 12/04/2023 - 23:04

      Thanks for the reply.

      I've not died before nor intend to so I can discount point 1, but have used the other points to varying degrees. My wife and I have sold jointly owned properties in the past, but the one in question is one I owned before we met and holds a fair amount of captial growth.

  • redfox1200 on 12/04/2023 - 20:50
    +5

    i recommend selling the property at cost to me, there will be no capital gains to pay

  • lostgoat on 12/04/2023 - 21:08
    -3

    I'd stay away from property OP . For 20 yrs and only 140k profits vs averages is terrible . Even some of the cheapest buys 20 yrs ago like a beach box beats your ass big time .

    • MS Paint on 12/04/2023 - 21:12

      What are you banging on about?

    • MeesusEff on 12/04/2023 - 22:08
      -1

      I'm not sure why you were downvoted but my parents bought their house for $550k in 2000 and it's about $1.4m now. $140k is a pretty meh ROI 😕

      • MS Paint on 12/04/2023 - 22:43

        They are being negged because the OP said

        Capital Gains payment is in the order of $140,000

        I assume that means that they are expecting to make a payment of $140k to the tax office.

        I've made a few assumptions here eg. The OP is on $90k pa.

        Lostgoat (I assume much like yourself) is stating that the property only increased in value by $140k over 20 years.

        • MeesusEff on 13/04/2023 - 00:09

          Oh my bad, yeah I did assume that.

      • Porker on 12/04/2023 - 22:48

        Just clarifying my error within my original post.

        Conservative profit is about $700,000. 50% CGT and 40% tax has me at about $140,000 paying back to the Government.

    • Porker on 12/04/2023 - 22:45

      Sorry, I realise I phrased my initial post wrong. The $140k is the additional income against my personal tax, as result of CGT. That figure already accounts for the 50% discount at about 40% income tax.

      • JimmyF on 12/04/2023 - 22:51
        +5

        So you made $700k on the sale based on your comment above…… before your tax bill, lets say that is $140k as claimed, you still walk away with $560k + the cost of the house in your bank account and all the 'rent' you collected in the last 20 years. Cry me a river.

        • Porker on 12/04/2023 - 23:11

          Thanks for the editting/updating of the response.

          Should I find a way to legally perform what I intend to do, I'm happy to share it here to help others. I appreciate that I still make a profit in the end, but I liken the situation to winning the lotto and making informed decisions rather than blowing through the money simply because it's there.

          If there's no way to avoid the tax, which may be the case, then so be it.

          • JimmyF on 12/04/2023 - 23:44

            @Porker:

            If there's no way to avoid the tax, which may be the case, then so be it.

            There are ways to avoid tax to a point, but as a PAYG tax payer they are very limited. So you might be gifting a big fat juicy amount to the ATO, but don't lose sight that you also 'gained' $500k+ in the process.

      • MS Paint on 12/04/2023 - 23:43

        Stop apologising. I thought it was quite clear.

        Capital Gains payment is in the order of $140,000

    • 1st-Amendment on 14/04/2023 - 17:28

      For 20 yrs and only 140k profits vs averages is terrible

      Everything you just wrote is terrible.
      Firstly, the $140k is the tax liability not the profit.
      Secondly, to know if it's a good ROI, you need to know the initial investment amount which hasn't been given. If he bought it for $100k and turned that into $700k PROFIT (which would give a CGT amount of $140k depending on income) after 20 years then it is a superb result.

  • Venustrap87 on 12/04/2023 - 21:22

    just curious do u pay the CGT on settlement of the property or afterwards when you've sold the place

    • robbyjones on 12/04/2023 - 21:39
      +1

      Do you understand what CGT is?

    • Porker on 12/04/2023 - 22:58

      Upon settlement, the buyer pays Stamp Duty on the property, which is in the order of 4 or 5% of the purchase price. When one sells, then they pay Capital Gains Tax unless it's their Principal Place of Residence and/or other allowances.

      In my case, the house has been rented more than lived in by me, so I'll pay a proportional Captail Gains Tax - basically only have to pay for the years I wasn't living there.

      For investment properties, there's yearly Land Tax too.

  • Typical16-bitEnjoyer on 12/04/2023 - 21:53
    +3

    Dying is a useful event that can potentially avoid CGT. You could look into that.

    • MS Paint on 12/04/2023 - 22:30
      +4

      Lol. I only said to my wife this morning that I would like to be cremated. She booked me in for next Tuesday.

    • humilem servum tuum on 13/04/2023 - 23:19

      Doubt it would work in this case, since the property concerned generated income, wasn't OP's main residence at time of death and wasn't acquired before 20 September 1985.

      • 1st-Amendment on 14/04/2023 - 17:30
        +1

        Doubt it would work in this case

        It absolutely works for everything. Sure the missus might have to pay some tax, but you won't, you'll be dead. Dying actually solves all of your problems immediately.

  • Bargainitis on 12/04/2023 - 22:44

    Some initial thoughts:

    1) is the $140K your estimated CGT or actual capital gain? If it’s the latter, than it’s $70K x your marginal tax rate would be your tax liability.

    2) I can’t remember if adding / transferring to spouse triggers stamp duty, if it does then she (I guess you both share) needs to pay stamp duty. She can then live in it for 6 month and make it PPOR then sell? That might be an avenue?

    • Porker on 12/04/2023 - 22:55

      Yes, item 2 is what we have been reviewing. Thanks for the considered reply.

      • Bargainitis on 12/04/2023 - 23:16

        Can you report back when you run this by your accountant?

        I can’t imagine the ATO not scrutinising this? It would seem the most basic way to minimise / avoid tax and I spent 2 mins thinking about it. They may treat the original sale as related party perhaps which may not ‘reset’ the PPOR clock.

        It also comes down to how big of a tax bill it is too. For $140K, they may not even care.

        • Porker on 12/04/2023 - 23:27

          Yes happy to report back if the news is good.

          Sorry I mistyped my original post, the $140k isn't the capital gain, it's the additional personal income after 50% CGT discount at 40% income tax.

  • JIMB0 on 13/04/2023 - 00:03

    Don't sell it is the best way to avoid CGT. What do you need the money for anyway? Might be better to borrow against the house instead.

  • Ramennightmare on 13/04/2023 - 08:20

    From my understanding, you have the following options to minimise your tax:

    1) Concession contribution (use all your rollover cap), won't help much with your $700k profit
    2) Divorce settlement (transfer title to to wife) -CGT relief
    3) Don't sell the property now and move back in there, do a huge renovation and keep your asset test in considerably low level and enjoy governemnt pension when you hit pension age.

    Otherwise, if you really need the money now, cop the tax bill and get your accountant to negotiate a payment plan (potentially interest free). Then, use the free cash to generate more income during the term.

    • deme on 13/04/2023 - 14:36

      Divorce just defers the CGT, it doesn't just go away.

      • Ramennightmare on 13/04/2023 - 14:39

        True, at least it is buying OP some time to figure things out or his wife got some loss to offset against. Other than that, I can't see why OP would want to sell a house in this market unless he really needs the cash.

  • deme on 13/04/2023 - 08:39
    +4

    Just for everyone OP has made about $700,000 and is trying to doge $140,000 of tax

    the property capital gain isn't $140,000. This is the additional amount to my personal tax after 50% discount and applying 40% income tax.

    • netjock on 13/04/2023 - 09:21

      True. But $560k net after 20 years which is $28k a year (nominal, not after inflation). Hopefully the net rent was worth it.

      • deme on 13/04/2023 - 09:49
        +1

        But $560k net after 20 years doing nothing while someone else pays the mortgage and anything left is discounted by the tax payer.

        • netjock on 13/04/2023 - 10:43
          +1

          Say you buy a property today for $300k. You need to stump up 20% deposit which is $60k plus stamp duty.

          Negative gearing. Don't forget that is negative cash flow monthly on your after tax income and refunded end of the tax year. Lose your job, need to pay the mortgage, go on holidays need to pay the mortgage, if you get sick need to pay the mortgage. Need to pay the rates which is double negative cash flow for that month. You also need to manage when interest rates go up / down.

          If you really want a do nothing go and buy the index with the $60k. (VAS if you dropped 60k in 20 years ago at 9% return would get you about $330k)

      • Ghost47 on 16/04/2023 - 13:25
        +1

        Does that take into account costs like taxes, agent fees, transaction fees, maintenance costs, repair costs etc? Love how people think property is easy money, shares would’ve performed way better in the past 20 years and been truly passive income.

        • netjock on 17/04/2023 - 11:15
          +1

          Yup.

          The rent doesn't keep up with the cost of tradies now. Say you collect $500 per week. Electrician quoted me $250 labor to change an extractor fan. Lets say they need to travel 30 mins each way. Still $125 per hour.

    • techlead on 14/04/2023 - 11:59

      I don't get it, just pay your taxes man. I've sent enough to the ATO over the years for them to be able to buy pretty much any property in Sydney outright.

      Don't be so stingy.

      • 1st-Amendment on 14/04/2023 - 17:32

        I don't get it, just pay your taxes man. I've sent enough to the ATO over the years

        Just do what they tell you, said no-one successful ever…

        • techlead on 14/04/2023 - 20:50

          I don't think there's much wiggle room when it comes to paying your taxes.

          Plus I'm happy to be getting the 50% CGT discount for most of my crypto profits.

          • 1st-Amendment on 15/04/2023 - 11:55
            -2

            @techlead:

            Plus I'm happy to be getting the 50%

            So you wouldn't prefer 100%? Oh well, you do you…

            • techlead on 15/04/2023 - 18:46

              @1st-Amendment: Well no, because if you look at the countries with no CGT, they aren't very good. I actually considered this, because my gains were so huge, I could have easily moved to a country with no crypto tax, live there for a year until I'm no longer a tax resident of Australia, sell then move back to Australia.

              Those countries are not very safe, I'm not going to say what Trump said, but I felt its not worth the hassle. I'd rather pay my taxes and not have to live in those countries for a year.

              So the answer to your question is no, in the end, I'm not going prefer a 100% discount because I know what that would lead.

              • 1st-Amendment on 16/04/2023 - 11:23

                @techlead:

                because my gains were so huge

                If your gains a huge than so will your tax bill… and therefore it's probably worth spending more than 3 seconds doing some research into this.

                Those countries are not very safe

                Only if you didn't spend at least 3 seconds doing some research… but as I said, you do you…

                • techlead on 16/04/2023 - 13:21

                  @1st-Amendment:

                  If your gains a huge than so will your tax bill

                  The taxes I've paid to the ATO so far can purchase nearly any residential property in Sydney, except those trophy luxury ones.

                  therefore it's probably worth spending more than 3 seconds doing some research into this.

                  I have spent more than 3 seconds researching this.

                  Only if you didn't spend at least 3 seconds doing some research… but as I said, you do you…

                  Sounds like you have researched this. Which country do you recommend I move to for a year to avoid paying Australian CGT taxes on my crypto gains?

                  • 1st-Amendment on 17/04/2023 - 07:42

                    @techlead:

                    the taxes I've paid to the ATO so far can purchase nearly any residential property in Sydney

                    Yeah you said this already. And yet instead of increasing you asset portfolio with money, you just threw it all away without a second thought? Doesn't sound great…

                    I have spent more than 3 seconds researching this

                    You actions say more than words here. Just giving away potentially millions of dollars to someone for free doesn't sound like you have.

                    Sounds like you have researched this.

                    Not this issue specifically, but I did spend 3 seconds Googling it and came up with a more favourable outcome than just throwing money away.

                    Which country do you recommend I move to for a year to avoid paying Australian CGT taxes on my crypto gains?

                    Once your tax liability is sufficiently large, you can justify the cost of setting up business in any of the countries with more favourable tax rules than here, and trade through that entity for lower losses. You don't even have to move there to do this, although I personally would find a year living in another country very enjoyable. What do you think is so 'unsafe' about Singapore, Malaysia, Portugal, Germany, Switzerland, or the Cayman Islands? I've been to most of those places, and actually already lived in a couple of them and they are all fantastic places.

                    • techlead on 17/04/2023 - 09:02

                      @1st-Amendment:

                      And yet instead of increasing you asset portfolio with money, you just threw it all away without a second thought?

                      How selfish are you? The ATO should go through your taxes with a fine toothed comb. You think paying taxes is "threw [throwing] it all away". Do you even know what taxes are? I'm happy to contribute to the provisioning of services to other Australians by the Australian government. That's not "throwing it all away" in my books.

                      Doesn't sound great…

                      You don't sound like a great person

                      Just giving away potentially millions of dollars to someone for free doesn't sound like you have.

                      I didn't give away millions of dollars to "someone", I gave it to the Australian government.

                      I did spend 3 seconds Googling it and came up with a more favourable outcome than just throwing money away.

                      and?

                      Singapore, Malaysia, Portugal, Germany, Switzerland, or the Cayman Islands?

                      Singapore - No, too hot, don't like the weather
                      Malaysia - No, its not a safe country. UK advisory, The Foreign Commonwealth & Development Office advises against all but essential travel to: All islands and dive sites off the coast of eastern Sabah from Kudat to Tawau, due to the threat of kidnapping. Seems like I'm very good target for that
                      Portugal and Germany, haven't considered before
                      Switzerland - No, too cold, don't like the weather
                      Cayman island - How cliche is that lol? Don't like it there, can't see myself living there for a year and enjoy it

                      • 1st-Amendment on 18/04/2023 - 09:57

                        @techlead:

                        How selfish are you?

                        The same amount as you and everyone else, I'm just more aware of this fact than you clearly. I suggest you read Richard Dawkins book The Selflish Gene, he covers this in there.
                        You originally said you didn't do take advantage of this because you didn't want to move (self-interest), but now you're not doing it because of your love of the people? Pick a lane 🤣

                        I'm happy to…

                        So you do what makes you feel good? And you cant see that this is the exactly the same self-interest?

                        contribute to the provisioning of services to other Australians by the Australian government.

                        So why did you use the 50% CGT discount and not pay the full 100% amount? Why don't you donate your entire profit to the government? So selfish…

                        All islands and dive sites off the coast of eastern Sabah from Kudat to Tawau

                        Lol you went and Googled that and that is the best you could come up with? Maybe choose somewhere to live other than a dive site off the east coast… 😂

                        Portugal and Germany, haven't considered before

                        Because you never did the research, exactly like I said…

  • Malik Nasser on 13/04/2023 - 09:27

    If you dont want to pay tax, then dont sell the asset.
    If you need cash, borrow against the asset (tax free money).
    This goes into some of the details: https://www.youtube.com/watch?v=-hqEIseS_e0

    • Ramennightmare on 13/04/2023 - 09:39
      +1

      That's true, just borrow against the equity of the property. Use the money to invest elsewhere, claimed the interest deduction.

      Or else, just move in, treat it as PPOR and do a huge reno and keep it until pension age.

  • Chewy2221 on 13/04/2023 - 10:05

    https://www.ato.gov.au/individuals/capital-gains-tax/cgt-eve…
    It might be worthwhile reading the information in the link above. I think that CGT is payable upon change of ownership, regardless of whether you sell the property to your wife. Good luck, but I think you will just have to accept the tax bill.

  • chrismatt on 13/04/2023 - 13:14
    +1

    I strongly suspect OP is from ATO. Trying to understand what are the loop holes? Instead of hiring a consulting firm, they might be using this Ozbargainers(who are more intelligent than Big 4 consulting firms). Need to be careful about our response so that they don't plug the loop holes

    • JIMB0 on 13/04/2023 - 13:41
      +2

      That's why I didn't share the one trick I know of getting around this problem.

    • Porker on 13/04/2023 - 14:03
      +1

      …. We know who you are….

  • pdperth on 13/04/2023 - 14:27

    Sell some dud shares, like telstra, to make a capital loss. It offsets any capital gain.

    • amorn on 13/04/2023 - 15:16

      how long do you have to hold for it offset?

  • Rase on 14/04/2023 - 08:00

    If you have been claiming tax deductions for investment property costs and losses for 20 years, you may have accumulated a significant tax loss. However, if you sell the investment property and make a capital gain, you cannot use the tax loss to offset the capital gain for CGT purposes.

    One option to consider is to keep the investment property for at least 12 months from the time you stop claiming deductions for costs and losses. This will allow you to claim the CGT discount of 50% if you sell the property at a later time. However, this does not eliminate your CGT liability.

    Another option to consider is to transfer ownership of the property to a Self-Managed Super Fund (SMSF), if you have one. This may allow you to avoid CGT on the sale of the property, as the SMSF is taxed at a lower rate than individuals. However, it's important to note that there are strict rules and regulations surrounding SMSFs, and seeking professional advice is highly recommended.

  • techlead on 14/04/2023 - 11:28
    -2

    So the net profit before tax for this 20 year property investment is $700k?

    Wow, I don't understand why people still think property investment is so good. My tax bill this year is more than $700k and I'm very happy to pay it.

    • SBOB on 14/04/2023 - 11:43

      Well, at least you didn't keep your humble bragging to just one thread.

      Considering you've made no comparison on cost basis or risk profile for that profit comparison of yours vs ops real estate, your statement is pure crypto bro level quality chefs kiss

      But thanks for paying tax.

      • techlead on 14/04/2023 - 11:53
        +1

        It terms of cost basis, I'm pretty sure the amount of money I put into crypto to make my gains would be way way less than OP. There's a high capital requirement for property with not much gain.

        Starting Oct 2013, if you bought $500USD worth of BTC every single month, you'd spent $57,000 USD and have $1,461,790.04 worth of BTC. So your gain would be $1,404,790.04.

        This is achieved in 10 years, not 20.

        I'm always happy to pay taxes, its the price I pay for a civilized society. Taxes are only payable on profits, I'm happy to be making profits.

        • SBOB on 14/04/2023 - 12:16

          or risk profile for that profit comparison

          But good for you little crypto bro. Proud of you. Great job. You're the best.

          • techlead on 14/04/2023 - 12:22

            @SBOB: True, its a little hard to price.

            I admit, back in 2013, it was a gambling, definitely, I wasn't even sure if Bitcoin would make it. Now, 10 years on, I know for sure it has made it, its here to stay and be bigger in the future.

    • Porker on 14/04/2023 - 11:46

      I didn't down vote you.

      Curious to understand if that tax bill is from your salary-based situation or you have other ventures?

      • SBOB on 14/04/2023 - 11:46
        +2

        It's crypto gains.

      • techlead on 14/04/2023 - 11:54

        I don't care about downvotes, couldn't care less about it.

        Its from my crypto gains, this is the amount I have to send to the ATO on top of my taxes which has been withheld from my salary.

  • redpenguin on 17/04/2023 - 11:58

    Lets say your property is worth $1M. If you borrow $1M from a friend with the property as security, then default, and they sell it for $1M to clear your bad debt, you pay no taxes of any sort. If you borrowed the money with the intent to dodge tax that way, the tax man will come after you.

    The only way to legally not pay CGT is to not sell the property.

  • nightmarez3k on 20/04/2023 - 01:00

    Sell the property when you retire. You will get taxed at your lowest tax rates.

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