Owned a rental.property from new for last 20 years with ex wife. As of 2 years ago it became mine in a financial

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Customer: Owned a rental.property from new for last 20 years with ex wife. As of 2 years ago it became mine in a financial settlement. Is it true there would be no capital gains tax if I keep it and sell it once I retire in approx 10 years time?
JA: What is the asset involved here?
Customer: A house
JA: When did you acquire the house? What was the initial value?
Customer: I think in 1997. Bought for $175k. Now worth $500k
JA: Is there anything else the Accountant should know before I connect you? Rest assured that they'll be able to help you.
Customer: I don't think so
Answered by John Melis in 5 mins 1 year ago
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John Melis
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John Melis, Expert

Hello, I’m John Melis, a solicitor in Australia, and I’ll be helping you with your question today.
If the rental property was a principal place of residence for that period of time, 20 years, then there would be no capital gains tax involved on that property.
Does this help with your question today?

Customer
NoIt was never lived in . Always rented out however I recently read that cgt is not applicable if I sell it once I'm retired. That's my question
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John Melis, Expert

When the financial separation occurred, your lawyer had an obligation to inform you that as the property was an investment property, it will incur capital gains tax. The property you have does not pre-date 1985. Therefore capital gains tax will apply on that property. You may have a claim against the law that acted for you for negligence in respect of failing to advise you of capital gains tax.Does this help with your question today?
Customer
I was aware of the capital gains tax. However, I read on an Australian taxation site that if the asset is disposed of in retirement it was not applicable. Have I got that wrong
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John Melis, Expert

The asset is still subject to get them gains tax as it is a passive investment.Does this help with your question today?
Customer
Is there any way either now or when I retire to minimise this cgt? It will be considerable
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John Melis, Expert

If you prefer to talk on the telephone, I have sent you a special offer to assist you in more detail, as it will make it easier to discuss your matter. I kindly request that you complete the information on the offer, and we can talk straight away as you need. Otherwise, we can keep chatting in this box.
Customer
No thanks. Txt is fine
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John Melis, Expert

There are multiple structures you can use by transferring the property to different entities to minimise the capital gains tax. However they would be stamp duty complications with that but the capital gains tax maybe for excessive compare to the stamp duty transfer.
Customer
Entities such as what?
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John Melis, Expert

Moving the property into a discretionary trust. And potentially a hybrid trust.Does this help with your question today?
Customer
Ok. That's interesting. So by doing so I'd be up for stuff duty but when the trust sells it there would be no cgt to pay?
Customer
Stamp duty
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John Melis, Expert

That is correct. Have I answered your question today?
Customer
How do they calculate the stamp duty on say a $500k house although I still have a mortgage of approx 235
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John Melis, Expert

You can go to the State revenue office website and on their website they have there is calculate as you can utilise to calculate the stamp duty would be payable.Have I been able to answer your question today?
Customer
Ok. When the trust sells the property. Are there any restrictions on being able to access the money?
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John Melis, Expert

As long as the documentation is drafted correctly for the trust, you will be able to manage this affectively as per your requirements.
Customer
Ok. Last question for now. Who can set up the trust for me? Is it a specialised accountant?
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John Melis, Expert

You need a lawyer to prepare the deed document and carry out the transfer.
Customer
If it's transferred into a trust fund can it be negatively geared as I do now?
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John Melis, Expert

It was my pleasure to help you today, and I thank you for chatting with me.
Customer
Thanks for the help
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John Melis, Expert

I wish you a pleasant evening.
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