Minimising your capital gains tax on your investment properties, with Jeremy Iannuzzelli – Ep. 85
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For the latest episode of the Geared for Growth podcast covering the property investing journey, Mike is joined once again by Founding Partner of KHI Partners and dedicated property investor Jeremy Iannuzzelli, for part two of this special end of year tax series. In this episode, Mike and Jeremy talk specifically about minimising CGT on investment properties by ensuring you’re capturing every relevant piece of information, even before you buy.
Whilst CGT is a necessary component of most property investment portfolios, there are many ways to legitimately minimise the amount of tax you will pay. Jeremy is passionate about ensuring his clients optimise their tax returns by ensuring they have a strategy in place from the beginning, or at the very least, well before tax time.
Mike and Jeremy cover a lot of ground in this conversation, including what the rules are around your principal place of residence, how the CGT 6-year rule works, the adding back of depreciation under Division 43, and more. Jeremy also includes a specific example from his family’s own life where he minimised CGT liability by optimising super contributions.
Whilst this may be somewhat of a dry topic, Mike’s humour and Jeremy’s passion present this critical information in a way that’s both entertaining and easy to understand. This insightful overview makes it clear why having the right team around you, and partnering with experienced professionals, is essential in making the most of your portfolio.
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Mike is joined once again by Founding Partner of KHI Partners and dedicated property investor Jeremy Iannuzzelli, for part two of this special end of year tax series. In this episode, Mike and Jeremy talk specifically about minimising CGT on investment properties by ensuring you’re capturing every relevant piece of information, even before you buy.
What we cover in this episode
The 4 main entities that are typically used to hold property
Minimising your CGT obligation on the way in, and on the way out
The importance of keeping all of your purchase records
Increasing and decreasing your cost base
The add back of Division 43
Taking into account the time value of money
The CGT 6-year rule
Offsetting CGT with deductible personal concessional contributions to Super
Understanding the rules around your Principal Place of Residence (PPOR)
“If you’ve got a goal of say buying a property and holding it long term, then one would consider potentially a company’s not the right idea, companies are much more of a transactional entity -trading, buying, selling, building, developing, all those other things so ideally looking at more of a trust or an individual basis of purchasing” Jeremy 3:54
“The main thing to consider is capturing all of the significant records, all of the significant numbers that relate to the overall purchase price of the property and then the purchasing structure” Jeremy 4:56
“Division 43 is the capital works, that the fixed asset so it’s not carpets, blinds, kitchen appliances, hot water systems, those sorts of things, it’s more the structural components” Mike 9:20
“You really need to liaise together because we’re not here to fight with you, to waste your time and collect data that’s useless, we’re here to make sure that everything that we include, the inputs that go into that return, it’s there to favour you and really bring you in a very accurate cost base and a very accurate CGT calculation” Jeremy 16:12
“A lot of the planning of capital gain tax is not done after the year is finished, a lot of the planning is done prior to the year finishing and that’s where we can really make those decisions to not only minimise the capital gains tax as a result versus the cost base, but also minimise the tax that would be paid based upon those subsidiary tax measures in place and that we can implement as well” Jeremy 21:2
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The Geared for Growth property investing podcast was created by Mike out of a desire to provide value to his property investor clients. The idea is to source Australia's leading property investment experts and find how they and their clients are achieving exceptional results. The podcast is open to anybody interested in learning how to invest and the strategies you can apply to achieve exceptional results. You'll hear from buyers agents, mortgage brokers, strata managers, accountants and other professionals all sharing their insider knowledge.