If you use your property to earn income at any time, you will have entitlements and tax obligations.
Don’t pay more tax than you need to.
- Acquisition or Buying
- Ownership & Owning
- Disposal or Selling
What you do during each stage of the life of your property can affect your tax for years to come.
Acquisition/Buying
You can acquire a property :
- by buying
- by inheriting
- as a prize
- as a gift
- on the breakdown of a marriage.
Do You Know?
- Generally, the names you put on the purchase contract determine who must declare any income and claim the expenses.
- Costs associated with buying your property may be tax deductible or may be included in the capital gains tax "cost base" (cost of ownership) when you sell the property.
- The date you enter into the contract, not the settlement date, is your date of purchase for capital gains tax purposes.
Ownership & Owning
The following activities can affect your tax :
- renting out your property (either by renting out part of your home or moving out and renting all of it)
- improving or repairing your property
- subdividing your property
- having a home office or business
Do You know?
- You need to include all of your rental income in your tax return.
- Tax deductions on a rental property can include rates, interest, insurance, real estate agent management fees, depreciation and deductions for capital works.
- Expenses you incur while owning your property that you are unable to deduct may be included in the capital gains tax "cost base" (costs of ownership) when you sell the property.
- If you use your private home as a rental property, in most cases, you need a market valuation when you start to rent it.
- The difference between a repair and an improvement can affect the amount of your tax deduction.
- Subdividing land has no immediate capital gains tax consequences if you retain ownership.
- Running a business from home can make you liable for some capital gains tax when you sell.
Disposal or Selling
You can dispose of your property
- by selling
- by giving it away
- on the breakdown of a marriage
- through compulsory acquisition
Do You know?
- When you dispose of your property, you could be liable for capital gains tax.
- Your capital gain is the difference between your "cost base" (costs of ownership) and your "capital proceeds" (what you receive when you sell it).
- If you have owned your property for more than 12 months, you may be able to reduce your capital gain by the 50% discount.
- Simply transferring the property into someone else’s name may mean you have to pay capital gains tax.
BE PREPARED :
Keep proof of all you spend from the beginning to ensure you don’t pay more tax than you need to over the years.
You need to separately identify the cost of the building and any depreciating assets so you can claim all the deductions you are entitled to and work out your capital gain correctly when you sell the property.
For more information about investment properties, please visit http://tinyurl.com/2n57vb and ask me your questions.
About The Author
Warren Kruger is an Australian Tax Specialist and Advisor. For a FREE Report "7 Essential Strategies to Reduce Your Taxation NOW!" Sign Up RIGHT NOW in the Opt In Box located on the top right hand side of this article.
About The Author
Warren Kruger is an Australian Tax Specialist and Advisor. For a FREE Report “7 Essential Strategies to Reduce Your Taxation NOW!”,enter your name and email address in the Opt In Box located on the top right hand side of this article.
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