CGT and vendor financing

[de nero]

I would like to sell a property using vendor financing, and was wondering what capital gains tax would be payable on the following deal :

Purchase Price: $200,000

Sale Price: $220,000

Terms: 80% up front ($176,000)
+ a credit note for $44,000 (20%)


Would capital gains be payable on the $20,000 profit when the house is sold?

 

[bundy1964]

Hi de nero

Is the house your PPOR? If it is no CGT payable?

If it was an IP add stamp duty/conveancing costs to your cost base as well as agent fees for selling, minus your depreciation claims. In other words seek profetional help

bundy

 

[DaleGG]

Hi

Yes, CGT applies at the date of the contract and so you will pay tax on the full sale price even though you are yet to collect the full amount of money.

Dale

Originally posted by de nero
I would like to sell a property using vendor financing, and was wondering what capital gains tax would be payable on the following deal :

Purchase Price: $200,000

Sale Price: $220,000

Terms: 80% up front ($176,000)
+ a credit note for $44,000 (20%)


Would capital gains be payable on the $20,000 profit when the house is sold?

 

[de nero]

If I wrap the property, will I be liable for CGT on the contract profit of $20K?

 

[DaleGG]

Hi

No, if the wrap is one of many that you do in a business like manner. This is because the wrap profit is treated as income on an emerging basis when the funds are received.

Dale

Originally posted by de nero
If I wrap the property, will I be liable for CGT on the contract profit of $20K?