Property Investors Can Pay Less Tax With This Simple Piece Of Advice
Published 7:08 am 5 Jun 2019
If you are buying and selling properties and are doing more than a couple a year, then you may be able to run property as your business and that means massive differentials in what you’ll pay in tax. DG Institute Founder and CEO, Dominique Grubisa explains how you can look at paying income tax instead of capital gains tax on your property profits, what that means for you and how you can get started doing that right now.
If you’re active in the property space, you may want to consider your options when it comes to tax.
For example, people don’t realize that if they’re doing property and doing one or two deals a year they may be considered to run a property business, and what that means is instead of paying capital gains tax, they can opt to pay income tax on their profits.
If you’re doing that through a company or maybe superannuation, then your tax rate is going to be a whole lot lower.
The best thing you can possibly do for tax is look at your situation up front. Before you even buy a property look at the right entity to buy it in with your endgame in mind.
That will dictate who should go on the contract. Is it you as an individual? Is it your company? Is it a trust? How much money will you be making from this property? When will you be selling it? What does the profit look like? And what’s the best thing you can do for tax?
You need to get your accountant in at the start, because legally once you sign a contract and put a name on the contract that is the date that’s relevant for tax. Not when you actually buy it and settle, but when you write the details and sign and date the contract. And that can have a big knock on effect for tax.
It can result in you paying a lot more tax than you ever needed to pay without this planning.
Most people don’t plan to fail, they just fail to plan. So see your accountant before you sign the contract.
Get the right vehicle, the right entity, and minimize the tax you pay on your property ventures, and a big part of that may be income tax instead of capital gain tax depending on what you’re doing and your time frames.
Always plan first, get the most information so you can retain the most profit because we all know it’s not about what you make, it’s what you keep at the end of the day.
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