Capital Gains Tax

[scott]

Is this a legal way of minimising CGT?

Buy a place to renovate ownership -99% 18yo son and 1% me

Son gets bank loan, I go garrantor.

Son lives in property. Transfers drivers licence etc to establish it as his PPOR.

Spend money and time on renovation.


Sell at profit, ideally within 3 months

This profit would be exempt from CGT?
Whats the downside?
Any comments would be appreciated
Scott

 

[Kevmeister]

This profit would be exempt from CGT?

Err, why would it be exempt from CGT?

Assuming your 18 year old son has a Tax File Number, he will still presumably still have to declare the capital gain as part of his "income", and therefore will be taxed on it. The only difference is he will be taxed lower.

Also, by selling within 12 months you are not entitled to the 50% CGT discount.

 

[electra]

Hi Kevin

I think Scott was implying his son would claim the house as his PPOR and thus avoid CGT.

There would be a question as to how many times this could be done before he/you were considered to be running a business I guess.

Liz

 

[scott]

I think Scott was implying his son would claim the house as his PPOR and thus avoid CGT

Yes

I would do it once, twice may be too risky. I hope this to be a cash injection to kick start his investment strategy

Scott

 

[Kevmeister]

My apologies. Mustn't have sunk in...

 

[geoffw]

Two more strategies to minimise CGT

1. Wait for 12 months to sell (as Kevmeister suggested). Your son might actually have the need fot the CGT exemption himself (if he follows his father's excellent example)

2. Don't sell. Buy it. hold it, rent it out, and use increased equity for future borrowings. With the renovate, it could well be cashflow positive- so costing nothing to keep it- and keeping advantage of any future growth to boot.

 

[scott]

Not sure what you mean

1. Wait for 12 months to sell (as Kevmeister suggested). Your son might actually have the need fot the CGT exemption himself

Not sure what you mean. Being his proposed PPOR no capital gain. He will not have need for another PPOR in the near distant future. I assume you can have as many PPORs as you like but never more than one at any one time.

Scott

 

[ruk]

this can be done several times, until the ATO gives you a call.

i havn't got the guts but know many people that have done it and are still doing it and now are debt free.

go for it - you only have money to lose, they can't kill you,
says me hiding behind a tree.