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  1. #11
    Join Date
    May 2007
    Location
    Hamilton
    Posts
    3,586

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    Quote Originally Posted by BigDreamer View Post
    Ross, my reply was not related to the original post which he clearly mentioned he bought with the intention to trade but rather to the second post with the hypothetical scenario if someone bought with the intention of buy and hold.
    Sorry for misunderstanding your post. Normally I wouldn't jump all over it like that, just didn't want to confuse other readers. In your Hypothetical answer, this person would have been trading, so would be governed by the 10 year rule. So a trader buys a long term hold, has to keep for 10 years otherwise gains are taxable.

    Ross
    More Profit from Property? TEACH ME MORE
    Ross Barnett - Coombe Smith Property Accountants
    Proud to give the best property advice for over 13 years.

  2. #12
    Join Date
    May 2007
    Location
    Hamilton
    Posts
    3,586

    Default

    Quote Originally Posted by Damap View Post
    Go and get some advice. It is fixable no problem you just need proper advice. No one is going to post it here in a public forum :-)
    I agree with getting full advice, but be aware there isn't an easy fix to the tax. The property is always taxable! Only exception is for personal house as mentioned above or business premises. Otherwise there are some holes in the association rules, but IRD would most likely view structures that specifically break these rules as tax avoidance anyway, and still deem taxable.

    hmsid and jrad;
    Advice can help with whether you want/need to move from the trading entity, the GST implications and fully explaining the tax options and implications. Also the GST adjustment rules if you hold this property as a rental.

    But, think hard why you would want to keep this as a long term rental. lets compare to rentals

    1) Your rental that was a trade - gains are always taxable. So say cost $500k sell for $1 million in 25 years, pay $165k tax approx. So left with $335k gain after tax

    2) Buy a new long term hold - still tainted for 10 years and taxable if sold in that time. Say cost $500k and sell for $1 million in 25 years. No tax. So left with $500k gain after tax.

    With 1), you will need to repay the GST now if you sell to a new entity, at market rate.. If you keep in trading entity , then have to do GST adjustmnets over next 5 or so years, that will effectively repay the GST. But when ulitimately sell, still need to pay the extra gst too. ie gst adjustments repay GST on $500k, but then you sell for $1 million, so have to pay further $65k in GST.

    Ross
    More Profit from Property? TEACH ME MORE
    Ross Barnett - Coombe Smith Property Accountants
    Proud to give the best property advice for over 13 years.


 

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