Real Estate

How to minimize the CGT when selling a property?

Paying the CGT cuts through your profits when you are selling an investment property. You must be searching for a way to forego the CGT during the selling process. Is it even legally possible to sell an investment property without the CGT? Yes, it is possible. Read on to find the tax loopholes in the whole process so that you get the cream of your profits for future investments. There are some situations and tricks that help you save up on CGT when selling.

Live on the property

If the property you are selling is your home, you will be able to get rid of CGT. The property should be able to have the tag of Principal Place of Residence. When the property is your home, you can claim an exemption from CGT. The property you are selling, even if it is a plot, should have a house on it, and you should have lived there for a considerable amount of time. If the plot is vacant, you cannot claim an exemption. If it is the address to which your mail gets delivered and is inhabited by your family, you will be able to get an exemption from CGT.

Temporary absence rule

If the plot is vacant and there is a house, but there is no resident in it, you can still claim an exemption from CGT within the period of six years. If there has been no renter or resident in the space for some time, but it still continues to be your official main residence, you can take the exemption route for CGT. Therefore, even if it does not produce any income, you can still sell for its full value without any tax cuttings.

Hold the property for a year

Any property that is bought and sold within the frame of 12 months will be taxed with the CGT. The property exemption method is to hold the property for another 12 months before selling it. This establishes that the property has been put to use and can be resold without the CGT. However, if you use this method without the place of residence rule, you will only get a 50 percent discount. However, this method does help you save a lot of money.

There are other methods of exemption from CGT when selling investment properties, like increasing your cost base and investing in affordable housing. By using these above methods, you can save a lot of money and maximize your share of profits.

DISCLAIMER

No Legal, Financial & Taxation Advice. The Listener, Reader or Viewer acknowledges and agrees that: Any information provided by us is provided as general information and for general information purposes only; We have not taken the Listener, Reader or Viewers personal and financial circumstances into account when providing information; We must not and have not provided legal, financial or taxation advice to the Listener, Reader or Viewer; The information provided must be verified by the Listener, Reader or Viewer prior to the Listener, Reader or Viewer acting or relying on the information by an independent professional advisor including a legal, financial, taxation advisor and the Listener, Reader or Viewers accountant;

The information may not be suitable or applicable to the Listener, Reader or Viewer’s individual circumstances; We do not hold an Australian Financial Services Licence as defined by section 9 of the Corporations Act 2001 (Cth) and we are not authorised to provide financial services to the Listener, Reader or Viewer, and we have not provided financial services to the Listener, Reader or Viewer.