Some comments from Margaret Lomas regarding selling property.
“The process of buying and then selling again in a fairly short period of time can be very costly in Australia, due to stamp duties payable, real estate agent’s commissions and capital gains tax.
To build wealth through property by buying and selling, unless you happen to be lucky enough to buy in a market that experiences an unprecedented boom, is a slow process that can fail to deliver results.
However, there may be times where you find yourself at crossroads and you are tossing up whether or not to sell. Before selling property, weigh up all the costs and benefits. Remember, investment property carries capital gains tax (CGT), payable in the year incurred. You are liable to pay tax on half the difference of your cost base (the buy price plus all allowable costs) and sale price, less allowable selling costs, at your highest marginal rate of tax.
Be sure to measure the true costs of holding on a bit longer against the amount you must pay in tax – it could be that the $100 a week you pay, plus any potential gain, is a better option than paying too much CGT now.
Also, consider your potential selling costs – sales commissions, loan discharge fees, loan break costs if any, etc. Be sure the financial argument for selling supports this decision – you do not want to sell, then find your property’s value went up more than it cost you to get out.
Finally, don’t sell your property, use the profits for a great holiday and then never buy another investment again. Committing to a better financial future does mean making some sacrifices today, and these will most probably be both financial and emotional sacrifices.
Only sell a property if you can see no other way to hang on to it.”
Please talk to us (MRD) before you consider selling as there may be strategies and structures that you may be unaware of that would enable you to hold and reap the benefit of the growth without selling.
