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Capital Gains Tax On
Your 1st & 2nd Home.
How many times do people keep
their old home as an Investment
and purchase a new home to live in?
Is it the right thing to do?
Read this before you start wasting your money and study what
I am about to tell you, it could save you thousands of dollars.
from this to this....
How many times do you
think I get asked this question by
clients?
"We want to keep our home and turn it into an investment and we
purchase a new home,
can we still negative gear our home?"
So let me set the stage for you and see
if you can work it out for yourselves.
Let's say you purchased a home (as many of us do)
and then two years later you decide to upgrade to a better
home. So you go and purchase another home
and you decide to keep the first home as an
Investment Property.
Now the Tax rule
states that the first home that you lived in (and
is now an Investment Property), will not be charged CGT for
the first 6 years, even though you will claim tax benefits
and depreciation as a normal investment.
But because you have purchased a second home,
the first 6 years of that property will be
charged CGT. If you sold your second home 15 years later, you would need
to pay CGT on the first 6 years.
Many people do get into this situation. The most unfortunate
aspect is that they have put all their savings into the first
home (which they want to keep as an
investment), leaving the second home with a
full debt.
Now you tell me, is this the way to do it?
No.....
No...... No....Why?
You see,
you want to have the least
amount of debt as possible on your
home, because it cannot be claimed
against taxable income. But we want
to have as much debt on the Investment
Property so as to be able to get maximum tax
advantages.
I asked a taxation specialist (Mr. Geoff Rogers from Craig Ball
and Associates In Narellan NSW), the
same questions to see what he would
recommend anyone that was in this
same scenario and he
gave me the same answer.
"Ideally you need to
sell the first property or your home and
transfer all the money into your
new home and then use the equity in your
home to purchase an investment
so you get maximum tax
advantage.
So tell me, if you think other wise please
email me I would love to get your feedback.
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