Continued from previous blog post….
The client wanted to purchase the property under Tim as Tim is in the higher tax bracket. Though this looks like a smart decision in short run, we had a different argument.
When selling the property, Tim will have to absorb the entire capital gain to his taxable income. On a separate note, given the low interest rate environment, the negative gearing could be converted to positive gearing approximately after 6 to 7 years bringing a burden to Tim’s taxable income but could be saved if it is split between Tim & Christina. Overall the tax benefit for the couple including tax refunds/ payable while holding the property and selling the property after 15 years was approximately estimated as $ 10,000. (further assumption was made when calculating this figure)
Stay tuned to know what repayment choice he made.
Rands Financial Services is not an only a Mortgage Broking Firm but also CPA Accountants and owns a Registered Tax Agency. Therefore, our advice and assistance are more comprehensive than an average broker.
Therefore we always explain the options in details and clarifying any doubts, make appointments at a place and time convenient to you. Moreover, we update you with news often and revisiting your financial situation and continuously looking out for products which will reduce your interest at different stages of life.