Contact an adviser about capital gains tax
financial year. As capital gains tax is calculated by adding the gain to your income in the financial year the contract is signed, you can reduce your taxable income by claiming $35,000 as a tax deduction.
Keep in mind that deductible contributions lose a 15 per cent entry tax. You really need to talk to an adviser to find out what kind of fund is most appropriate for your risk profile, investment time frame and goals. I HAVE a mortgage of $250,000 on my home, plus a $300,000 mortgage on an investment property. The investment property is close to becoming neutrally geared. Are there any drawbacks if I refinance and pay off my home loan by taking equity from the investment property loan?
For the interest on a loan to be tax-deductible the purpose of that loan must be to buy incomeproducing assets. Obviously that would not apply here so there is nothing to be gained by your proposed strategy except a potential hike in the interest rate you are paying. Just make sure the loan on the investment property is interest-only to enable you to maintain the tax benefits you have now. I BOUGHT a property in 2009 and lived there before renting it out in 2012. It has been rented for less than six years and now I need to sell. If I move back in, do I need to live there for six months and then sell, or can I sell immediately without incurring capital gains tax?
As it has been less than six years since you moved out of it, you can claim the full capital gains tax exemption without moving back. If you do move back, the six-year period will restart. I HAVE recently read that rates, maintenance and interest can be deducted from assets acquired after 20 August, 1991, when calculating CGT. What is the situation if such expenses and interest had been claimed as deductions against income from the property as negative gearing? Could it be claimed again as costs of sale?
You can’t double-dip – any items claimed as a tax deduction in the year you declared income from the property cannot be added to the cost base and claimed a second time to reduce capital gains tax.
For the interest on a loan to be taxdeductible the purpose of that loan must be to buy incomeproducing assets
Noel Whittaker is the author of Making Money Made Simple and other finance books. His advice is general in nature and readers should seek their own professional advice before making any financial decisions. Email: noel@noelwhittaker.com.au