Flip

[WebBoard]

From: Mike .


Flips and CGT
From: David H
Date: 26 Feb 2001
Time: 08:38:50

Would someone please advise what happens in practice re CGT when you do a Flip. I know that the profit should be included in CGT calculations, but in reality is it? Who is to know that you have sold a property as you never purchased it?

 

[WebBoard]

Pierre

Reply: 1
From: Mike .


Re: Flips and CGT
From: Pierre
Date: 26 Feb 2001
Time: 14:36:55

Here's one way to look at this question.

There is no CGT if you conduct these transactions like/within a business - the houses are simply treated like stock and you pay tax on the revenue.

My opinion and/or thoughts only - do not take this as your legal solution - get it checked out. I will not be held liable in any way for the correctness of this or not.

But, I am open to discussion ...

Pierre

 

[WebBoard]

Duncan M

Reply: 1.1
From: Mike .


Re: Flips and CGT
From: Duncan
Date: 26 Feb 2001
Time: 09:13:46

If you assign the contract to someone prior to settlement and this is the way you make your living then you'll liable to pay Income Tax on your profits.. If you settle on the property and subsequently sell it you will be liable for CGT.

Regards, Duncan.

 

[WebBoard]

Darreb Bee

Reply: 1.1.1
From: Mike .


Re: Flips and CGT(att Duncan)
From: darreb bee
Date: 27 Feb 2001
Time: 18:32:01

but whos to know u have made a profit if no contract bears ur name? It seems possible to pocket the money? Correct me if i'm wrong, please.

 

[WebBoard]

Sim

Reply: 1.1.1.1
From: Mike .


Re: Flips and CGT(att Duncan)
From: Sim'
Date: 28 Feb 2001
Time: 09:41:30

If you rob a bank with a mask on, no-one knows your name either and you can just pocket the money.

Either which way, it is stealing and it is illegal. Getting away with it does not make it justifiable.

It is too easy to make money legally, and I would rather be tending my own garden in retirement than some prison garden !

Sim'

 

[WebBoard]

Robert

Reply: 1.1.1.1.1
From: Mike .


Re: Flips and CGT(att Duncan)
From: Robert
Date: 27 Feb 2001
Time: 19:37:05

Hi Darreb Bee,

Well, firstly since I do flip properties I can answer this directly.

Yes, you are right with what you have just said.

BUT

If the person that you have flipped to asks for a receipt so they can claim the flip fee as a tax deduction you need to do it by the books.

There are too many ways to make money legally to go ahead and try and hide earnings from the ATO. I flip through my company and this helps my compnay have a higher cash turnover which in turn shows the bank that the company earns $x'0000s instead of $x'00s. This way I can get more loans faster and get out of the rat race faster as well.

But they are just ramblings from a real flipper.

Cheers, Robert

 

[WebBoard]

David H

Reply: 1.1.1.1.1.1
From: Mike .


Re: Flips and CGT
From: David H
Date: 27 Feb 2001
Time: 09:58:45

What if you don't settle i.e. the property never goes into your name as you sign the contract "and/or nominee"?

However for CGT purposes doesn't the contract create the asset?

Basically what I am after is to not have to pay CGT and not have to pay stamp duty on a flip in Victoria. Please advise how this can be done. If this cannot be done then what is the benefit of flipping?

Thanks David