Exchange small chips for a blue chip

At the beginning of our investment journey, we buy affordable properties as we do not have big bucks to invest in blue chip area. At certain point of life, when we accumulate enough equity, we sell small chips in order to buy a blue chip property. This will trigger capital gain tax which is up to 50% our capital gain. It means that a last proportion of our assets will go away. What are your strategy to keep up our wealth in this scenario?
 
An option is to access the equity via an LOC or equity loan and use that to buy the bluechip - means you don't have to sell, can retain the asset and its income plus control a new asset, new income and potential capital gains.

Of course, this relies on you being able to service the loans as bluechips tend to be low-income generally speaking.

You could do a mix, too - realise a couple of Ip's, access equity from others.
 
. This will trigger capital gain tax which is up to 50% our capital gain. It means that a last proportion of our assets will go away. What are your strategy to keep up our wealth in this scenario?

Not really.

You will take the gain, reduce it by 50% if held more than 12 months, then add that to your taxable income for the year. Even on the highest rate this is less than 50%. At worst, tax will take around 25% of the nett gain.

As always, check with your accountant.
Marg
 
An option is to access the equity via an LOC or equity loan and use that to buy the bluechip - means you don't have to sell, can retain the asset and its income plus control a new asset, new income and potential capital gains.

Of course, this relies on you being able to service the loans as bluechips tend to be low-income generally speaking.

You could do a mix, too - realise a couple of Ip's, access equity from others.


Thanks for all reply. Now I understand it. Any other ways?

marg4000, you are right. if keep more 1 year, CGT is 25%.
 
Back
Top