CGT Nearing Retirement

[jan]

Hi All

Wonder if you can advise on our situation. We have an IP solely in my husband's name as he has a much higher salary than me. He would like to retire in 3 or 4 years time. Can you enlighten us on CGT and the best way to go. For instance, can he contribute the proceeds of the sale to his superannuation and ,if so, what would the tax implications be and would he be better off selling the IP after retirement ?

Cheers

 

[jrc]

While he is working and if his employer is making superannuation contributions he might not be able to save tax by contributing the capital gain to super. If his employer is willing he could salary sacrifice employment income to superannuation. There have been some articles in API.

How much is the capital gain likely to be?

 

[julia]

Article on this in August 2008 API

 

[Peter_Tersteeg]

Depending on his age when you do it, there can be substantial tax benefits selling the IP and putting the capital gains straight into super. This would be worth investigating through your accountant.

 

[Pushka]

We were told only way to reduce CGT if you are not self employed, is to salary sacrifice your salary into super, so the only money you will earn will be from the sale of the property. You will still have to pay CGT depending on how much 'profit' you make from the sale.

 

[wylie]

I thought you could sell an IP, dump up to $450K into your super as a "once only" chance. Not sure of the entry or exist fees or anything else, but it is something we may look at doing down the track.

Obviously, we would need to check everything out, but in the back of my (tiny ) mind it is something I thought we could use to reduce CGT.

That, or as mentioned already, salary sacrificing the whole salary into super in the year that you make a big gain, to help minimise the tax.

Obviously, if ever we decide to sell, a visit to our accountant will be in order so we get it "from the horses mouth".

 

[pennyk]

Do you need to sell it before he retires?
If he retires in one financial year, and you sell it in the following financial year, then the capital gains is based on his income in that year. So, assuming that his retirement income was significantly lower than his current income, then the capital gains should also be taxed at a lower rate, because the tax is based on the marginal tax rate.
We sold an IP a few years ago, and it settled in a year where we had a combined income of about 30K... nasty.... but we hardly paid any CGT.
Pen