How to reduce CGT if selling 2 properties within 1 finanical year??

I have recently sold my inheritance property on the 20/10/14 which is located in Blacktown NSW. I would now like to sell my investment property located in Surfers Paradise QLD next January 2015. However I would like to know if there are any ways to Reduce Capital Gains tax?

My Tax Accountant advised me to sell the Surfers Paradise investment property next financial year as I can use this to offset the Capital Gains tax for Blacktown and to avoid selling two properties under the same financial year.

I really want to continue with my plans to sell the QLD property in Jan so any solutions or insight would be greatly appreciated... :)
 
Do you have other loans that you could prepay interest this year, i.e. bring some of next year's expenses into this financial year?

Can you salary sacrifice now for the remainder of the financial year to get your PAYG income down?

What sort of capital gain will you be paying on each? What is your income?
 
I have recently sold my inheritance property on the 20/10/14 which is located in Blacktown NSW. I would now like to sell my investment property located in Surfers Paradise QLD next January 2015. However I would like to know if there are any ways to Reduce Capital Gains tax?

My Tax Accountant advised me to sell the Surfers Paradise investment property next financial year as I can use this to offset the Capital Gains tax for Blacktown and to avoid selling two properties under the same financial year.

I really want to continue with my plans to sell the QLD property in Jan so any solutions or insight would be greatly appreciated... :)

How can you offset the CGT? The only thing that reduces a capital gain is a capital loss on another asset either in a previous financial year or in the same year as the other asset is sold.

Get some calculations done based on your expected non capital gains income for this financial year plus the capital gains on both properties and see if the sale of Surfers Paradise pushes you into a higher marginal bracket for tax.

Can you reduce your other income eg by salary sacrifice to super? Was the inherited property the PPOR of the deceased, check what your cost base is.

You need some detailed calculations so you make the best choicefor you
 
Yes, one gain cannot offset another. But spreading over 2 years spreads the income - which may or may not save tax.

The only way to save on CGT is to reduce income. This can be done by:
1. Prepaying interest on other properties
2. salary sacrifice into super
3. make sure you are claiming every thing possible.
 
Yes, one gain cannot offset another. But spreading over 2 years spreads the income - which may or may not save tax.

The only way to save on CGT is to reduce income. This can be done by:
1. Prepaying interest on other properties
2. salary sacrifice into super
3. make sure you are claiming every thing possible.

or have a capital loss which can offset the capital gain eg: sell some shares at a loss, other capital investment or other property which was sold at a loss.
 
LC, with regard to the inhereted property. Now, speak to a pro about this (you know what I mean lol)

My understanding is, if the inhereted property was sold within 2 years of date of death and the property was ppurchased before 20 September 1985, then there is no CGT.

As I said, speak to a pro to confirm or ring tax office (and make a diary note of when and who you spoke to)
 
Blacktown property was inherited in 2009 and has been used as an investment property collecting rent for the last 5 years.

I have no other loans or properties however looking at purchasing a PPOR within next 3 months... could this help offset??
 
Blacktown property was inherited in 2009 and has been used as an investment property collecting rent for the last 5 years.

I have no other loans or properties however looking at purchasing a PPOR within next 3 months... could this help offset??

offset what?
 
I would start with understanding how much the CGT impact for each property will be. Many clients approach me in a panic thinking they will have a huge tax bill. Others also consider that there is little or no profit and then are stunned when you run the numbers and its inconsistent with their estimates. You cant plan without using real numbers. It will identify the magnitude of the issue. If its $15K and you were thinking it would be $50K perhaps there is little that can be done but your mind will be at rest.

Once you have a number in mind you can the look at strategies to :
1. Defer the impact (selling after 1 July ?)
2. Reduce the tax cost. For example in that year you may find that you satisfy the 10% rule and may be eligible to make a large sper contribution. Obviously depends on your age but its an option. Alternatively have you thought of this for a spouse ??
Sometimes tax savings need to come over time....Super is one of those that can deliver long term savings
3. Salary packaging options
4. Sale of other investments eg shares at a loss. Plenty of people have Telstra shares. The loss on these can be timed to match the profit and reduce a small amount of the impact.

Its all about prudent tax planning. Start with the actual tax estimate first.
 
Not sure what the estimated calculations would be?

Pulled out $101k from inheritance, salary tax bracket $85k package, QLD property purchase price $310k - hoping to sell for $400k+ ..
 
So on your Queensland property assuming you have had it more than 12 months
Purchase Price $310000
Stamp Duty & Legals
Selling costs
Total
Less sale price say $400,000
Capital Gain say $70000, 50% dscount $35000, tax on $35,000 at probably 39 c in the dollar including medicare levy, maybe part at 47 c in the $

You know what your income is, get your accountant to calculate the taxable capital gain on the sale that has already occurred and see whether it is worth waiting or not. The maximum extra tax you would pay this year compared to waiting is likely to be 8c in the dollar on some or all of the taxable capital gain.

Is your taxable capital gain after any discounts on the inherited property $101,000 or is that what you have grossed?


Taxable income


Tax on this income


0 ? $18,200

Nil


$18,201 ? $37,000

19c for each $1 over $18,200


$37,001 ? $80,000

$3,572 plus 32.5c for each $1 over $37,000


$80,001 ? $180,000

$17,547 plus 37c for each $1 over $80,000


$180,001 and over

$54,547 plus 45c for each $1 over $180,000
 
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