CGT Sell and Rebuy

[Made_Man]

Hi All,

this might be a dumb question to some however im unsure of what the out come would be.

we are looking at selling an IP we have with the intention of purchasing another. would we still need to pay CGT for that sale?

 

[wylie]

You do pay tax on the sale, even if you are selling to buy another IP. Otherwise, we would all do that, and avoid the tax .

 

[Rob G.]

Hi All,

this might be a dumb question to some however im unsure of what the out come would be.

we are looking at selling an IP we have with the intention of purchasing another. would we still need to pay CGT for that sale?

Not a dumb question.

In some countries there are CGT deferrals on a mere disposal and repurchase, but generally not in Australia, sadly.

Cheers,

Rob

 

[mumbai]

Not a dumb question.

In some countries there are CGT deferrals on a mere disposal and repurchase, but generally not in Australia, sadly.

Cheers,

Rob

True. Example is India. Though the catch is you pay CGT on everything irrespective of a PPOR or IP. If you sell and repurchase another, you dont pay the CGT.

 

[Peter_Tersteeg]

Not a dumb question.

In some countries there are CGT deferrals on a mere disposal and repurchase, but generally not in Australia, sadly.

I recall Robert Kiyosaki talking about this in Rich Dad, Poor Dad. There were a bunch of people trying to apply it in Australia for a long time after that, but it's not applicable down under.

 

[Made_Man]

so once the property sell's CGT will need to be paid then i can purchase the next property.

in that case im better off keeping the current property. is that right?

 

[coastymike]

But if it was a residential property used as a guest house it may be eligible for the small business concessions and the replacement asset rollover so not a stupid question at all.

As RobG once said "it all depends on the facts"

 

[Made_Man]

But if it was a residential property used as a guest house it may be eligible for the small business concessions and the replacement asset rollover so not a stupid question at all.

As RobG once said "it all depends on the facts"

it was purchased as an investment back in the 80's and has only been used as that since.

i had the impression that if you sell and buy in the same financial year you dont need to pay the CGT as you dont gain anything when you purchase the next one.

 

[Terry_w]

it was purchased as an investment back in the 80's and has only been used as that since.

i had the impression that if you sell and buy in the same financial year you dont need to pay the CGT as you dont gain anything when you purchase the next one.

If it was purchased in the 80s then it may be pre CGT - I think the relevant date is sometime in Aug 1985????

If pre CGT then generally CGT will not apply, and for this reason it may be best not to sell but to keep it growing tax free.

 

[wylie]

Relevant date is 20 September 1985. I would definitely not sell unless you have to if it is a pre-CGT property (as TerryW says).

 

[Made_Man]

Knowing my luck i would have purchased it on the 21st, the day after the rule came in.

 

[AXXO]

But if it was a residential property used as a guest house it may be eligible for the small business concessions and the replacement asset rollover so not a stupid question at all.

As RobG once said "it all depends on the facts"

This quote from EdTV -

holiday apartments owned and operated by the taxpayer are active assets where the apartments are operated similarly to a motel. No lease agreements are entered into and the guests do not receive exclusive possession of the apartment they are staying in. Instead, they simply have a right (licence) to occupy the apartment on certain conditions.

As the holiday apartments are used by the taxpayer in the course of carrying on a business, they are active assets under section 152-40

.

Otherwise the asset is used solely to derive rent, in which case it's not an active asset.

One must also meet all other conditions for further CGT relief of Active Assets. And it will certainly depend on the facts of each individual case.