Bite the bul­let and pay tax

In sell­ing an in­vest­ment prop­erty, Matt has to ...

Money Magazine Australia - - ASK PAUL -

QI am 25 years old. A few years ago my par­ents went in with me to buy an in­vest­ment prop­erty/po­ten­tial place for me to live in one day.

Be­ing a full-time mu­si­cian with a great in­ter­est in fi­nance (I got bet­ter grades in ac­count­ing than mu­sic but chose a mu­sic de­gree in­stead), I knew that set­ting my­self up early would be es­sen­tial for not only the longevity of my mu­si­cal pur­suits but for any fi­nan­cial speed bumps along the way.

This has been all well and good but my par­ents now want to sell their share of the prop­erty and put it solely in my name so that they avoid pay­ing more in­come tax when the loan is paid off at the end of the year.

Is there an easy, cost-ef­fec­tive way to do this? Or do we just have to put up with cap­i­tal gains tax and me pay­ing stamp duty again?

Good work, Matt. I am very ad­mir­ing of those who have the courage to fol­low their own path. Ac­count­ing would ob­vi­ously have been an easy choice for you with solid fi­nan­cial re­turns. Fol­low­ing your pas­sion for mu­sic will be a lot more fun but I don’t need to tell you the mon­e­tary re­turns will be patchy!

Here is the bad news. I have no words of wis­dom for you at all.

I am de­lighted that you will own your own home, as you say it will help pro­tect you from fi­nan­cial speed bumps. Sure, I have seen ex­pen­sive and com­plex schemes to try to avoid stamp duty and CGT but, to be frank, these are in my view tax eva­sion.

Tax spe­cial­ists know far more than I do in this area but I be­lieve your par­ents will be up for CGT and stamp duty. But the good thing is they will have made a profit, you will own a home and I sus­pect ev­ery­one, in­clud­ing the tax of­fice, will be happy. Good luck with your mu­sic ca­reer.

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