reducing CGT: legit?

[TMNT]

Just a curiosity question since I've never sold

Assuming you bought properties under your name/trust. When you were young, and when it.comes time to pass on

Assuming the properties have increased two three four five fold

That avoid cgt. Can you refinance as late and as high as possible, take the cash spend it and file for bankruptcy?

What are some good and legit and.possibly creative ways to avoid cgt. Without living in it

 

[jrc77]

Some of my random thoughts ...

To minimize (not avoid), buy in a discretionary trust, wait until your other income is minimal (ie. retirement), wait until any children are of adult age, stagger sales over multiple years, then distribute the gains amongst as many low income beneficiaries as possible.

Jason

 

[Terry_w]

Just a curiosity question since I've never sold

Assuming you bought properties under your name/trust. When you were young, and when it.comes time to pass on

Assuming the properties have increased two three four five fold

That avoid cgt. Can you refinance as late and as high as possible, take the cash spend it and file for bankruptcy?

What are some good and legit and.possibly creative ways to avoid cgt. Without living in it

If you purchased in a trust this will survive you. ie the trust will continue long after you are dead.

But if you buy in your own name and die it may be possible to die owning millions and end up bankrupt in death - you would find it hard to get finance from that point on!

But in practice it won't work.

Say you purchased property A for $100,000. This was your only property.
After 50 years it is worth $10,000,000

CGT would be about $2,500,000 at most assuming current laws.

so you would have to find a bank willing to lend you 75% LVR with large cash out rules, plus you would be about 70 years old, probably not working.

You would also have to time your death well too as if you took the money too soon the interest would rapidly build up. Any cash left in your accounts would be at risk too, so you would have to gift it to your 24 year old wife who may spend it instead on her boyfriend.

 

[TMNT]

If you purchased in a trust this will survive you. ie the trust will continue long after you are dead.

But if you buy in your own name and die it may be possible to die owning millions and end up bankrupt in death - you would find it hard to get finance from that point on!

But in practice it won't work.

Say you purchased property A for $100,000. This was your only property.
After 50 years it is worth $10,000,000

CGT would be about $2,500,000 at most assuming current laws.

so you would have to find a bank willing to lend you 75% LVR with large cash out rules, plus you would be about 70 years old, probably not working.

You would also have to time your death well too as if you took the money too soon the interest would rapidly build up. Any cash left in your accounts would be at risk too, so you would have to gift it to your 24 year old wife who may spend it instead on her boyfriend.

you are a funny man terry, I couldnt even handle a 24 year old wife now, I doubt I could handle one when im old, ugly, and when going to the toilet is like climbing mt everest

anyway, lets assume we get around the unserviceable aspect, and so I can get 75% LVR on the $10,000,000, or I could have slowly topped up over the years until the banks would not lend me any more

So your example of buying under your own name, and dying leaving heaps of debt, could you not near the end of your life, start taking as much $$$ out and buying a house for your kids for example???? or is that considered to break the law that basically stops a person from transferring assets out and then filing for bankruptcy

also, I guess if you were buying it in a trust, you could introduce or if it was done in teh first place to put your kids as trustees or beneficiaries so upon your death nothing changes,

my question was more, is there a way to legitimately or even createively avoid CGT

 

[Terry_w]

Even when you are dead the norma bankruptcy laws apply to your estate. So any gifts within 5 years of your death could possibly be clawed back. Any properties you purchased or helped purchasee could be deemed to be held on trust for you (the estate) so could be clawed back.

You best bet would be to spend the money on consumables that wouldn't able to be clawed back - sex, drugs and legal advice or an in house nurse or carer etc.

 

[perthguy]

What are some good and legit and.possibly creative ways to avoid cgt. Without living in it

Something interesting I have been thinking about is property in a SMSF. Say you and your partner set up a company with yourself and your partner as directors. You can set up a SMSF with the company as a corporate trustee. The SMSF could be set up to allow it to aquire residential property. Later in your lives, your children can be added to the fund through becoming directors of the company. Changes to the SMSF deed may also be required.

I don't know anything about it though and it seems complicated but may get around your CGT concerns. Professional advice required!!!

http://www.smsfessentials.com.au/strategies/smsf-succession-planning

 

[TMNT]

Even when you are dead the norma bankruptcy laws apply to your estate. So any gifts within 5 years of your death could possibly be clawed back. Any properties you purchased or helped purchasee could be deemed to be held on trust for you (the estate) so could be clawed back.

You best bet would be to spend the money on consumables that wouldn't able to be clawed back - sex, drugs and legal advice or an in house nurse or carer etc.

Thanks terry
Looks like I'll be buying slurpees

 

[Terry_w]

A asset supporting a pension in a SMSF can be sold CGT free in some circumstances - this is possibly one way.

There are also small business concessions which allow certain business assets to be sold CGT free or very low.