Gifted property and CGT

Suppose I am gifted a property, i.e. bought it for $0 and I choose to own this property as an IP or holiday home.

Then when I come to sell it do I have to pay capital gains tax on just the difference between the market value at the time of transfer and the price at the time of sale, or the whole price at the time of sale?
 
Gift from a relative or a good friend? I think you'll find Part IVA will kick in and attach full market value to the price so you wont' have a cost base at $0.

Anyone thought of the willing aspects of an IP? If we continually draw down equity from the IPs and never sell (till we die), you'll end up with a large CGT bill for your beneficiaries. Do them a favour by drawing down as much equity as you can and either spending or giving them cash rather than your IPs so they won't ever need to pay the large CGT bill on eventual disposal. Instead, will the IP to the Tax Commissioner Michael D'Ascenzo himself and let him deal with the CGT. Brilliant!
 
Anyone thought of the willing aspects of an IP? If we continually draw down equity from the IPs and never sell (till we die), you'll end up with a large CGT bill for your beneficiaries. Do them a favour by drawing down as much equity as you can and either spending or giving them cash rather than your IPs so they won't ever need to pay the large CGT bill on eventual disposal. Instead, will the IP to the Tax Commissioner Michael D'Ascenzo himself and let him deal with the CGT. Brilliant!

Hi asdf, can you explain a little more, i'm a bit confused. so instead of giving the family the property you give them the money from the equity. So what happens to the property?
 
When CGT is worked out the CG is the capital proceeds from disposal less the asset's cost base.

If you receive the asset for nil, the cost base will be the value of the asset on the date of acquisition.
 
Anyone thought of the willing aspects of an IP? If we continually draw down equity from the IPs and never sell (till we die), you'll end up with a large CGT bill for your beneficiaries. Do them a favour by drawing down as much equity as you can and either spending or giving them cash rather than your IPs so they won't ever need to pay the large CGT bill on eventual disposal. Instead, will the IP to the Tax Commissioner Michael D'Ascenzo himself and let him deal with the CGT. Brilliant!

I wrote about this a few years ago in the living on equity thread. You draw down on your properties to the max available, gift the cash to friends (no bank transfers) and then conveniently die making sure you don't have any other assets.

Your estate files your last tax return and finds it doesn't have enough money to pay the tax and goes into insolvency.

imagine you purchased a property in 1990 for $100,000 and it goes up to $1mil. You borrow another $700,000 and gift to your friends. CG on this property would be $450,000. tax maybe $220,000 or so.
 
Nice one Terry. So can an estate sell all the properties, distribute profits then file the tax return. At which point theres nothing else to pay ATO? Theres probably claw back provisions to prevent this.

I reckon they will introduce death duties again over the next 20 years. Our govts, Labor or Liberal won't be able to help themselves at looting whats going to be the biggest wealth transfer in history over the next 2 decades.
 
Hi asdf, can you explain a little more, i'm a bit confused. so instead of giving the family the property you give them the money from the equity. So what happens to the property?

Give it to someone else. Property worth nothing if you've maxed out the loan.
 
Nice one Terry. So can an estate sell all the properties, distribute profits then file the tax return. At which point theres nothing else to pay ATO? Theres probably claw back provisions to prevent this.

I reckon they will introduce death duties again over the next 20 years. Our govts, Labor or Liberal won't be able to help themselves at looting whats going to be the biggest wealth transfer in history over the next 2 decades.

After you die you still have to file one final tax return and pay any income taxes due - but if your taxes due are larger than your estate then there is not much they can do. You will technically be insolvent and under the bankruptcy act certain transactions could be overturned and money clawed back etc.

You will also get a bad credit rating and probably won't be able to borrow for a very long time:eek:
 
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