Capital Gains

Now I'm on a serious learning curve with property investment.... and I saw this story on Today Tonight (Mon nite) where a Sydney couple were supposedly making a fortune ($1m in 8 months) renovating and selling properties.

But don't they pay close to half that in capital gains tax????
Or is there some tricky way people are avoiding this obligation.

I just don't get it. Surely a buy and hold strategy is better!? Perhaps this has been covered before!

Andrew
 
Hi Andrew

I did not see the story so it is hard to say too much. However, if they are doing this as a living, then the profit is not taxed as a capital gain, but instead as ordinary income such as business income.

This also means that they might be able to claim more tax deductions for semi private things; and, using a trust, distribute income out to low income or non taxed family memebers to reduce the tax further.

Another possibility is that the house was bought as their PPOR and so any gain is tax free. If they repeat this process over and over again, the tax office will soon argue with that assumption.

I know this does not directly answer your questions, but, I hope that it helps a little.

Have fun

Dale
 
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