add sale to income

[fernfurn]

If I buy a house, rent out for a year then reno and sell, do I pay 50% to tax, or add the profit to my other income and pay normal tax on it? If I keep doing this do I still pay normal earner income tax or is it classed as a business.

 

[wylie]

After holding 12 months, you would halve the capital gain and add that to your other income and pay tax on whatever the total is.

I don't know how many times you could do this before coming to the attention of the ATO who would say it is your business.

 

[Greg Reid]

It will get down to the definition of carrying on a business as compared to a hobby. If it is your only source of income and is repetitive, it leans one way, if your main source of income is a full time PAYG job then it may lean the other way and be treated as wylie suggests.

To get away from the CGT issue, others buy as a PPOR, live in it as they renovate, then sell. Having done it once, not what I would want to live through again with young kids (at the time) but many do.

Manufactured growth like this can be an excellent way to increase your wealth.