How to pay less tax when immigrating to Australia to dispose of your own property

In the past year, according to statistics, although the housing market in Australia is stable, the situation of China people investing in Australian real estate is still hot. Sydney, Melbourne and Brisbane are all popular cities for China people to buy houses. Many investors, housing upgrades and baby boomers sell their property for profit.

You may soon find that the considerable income from the transfer of value-added tax and the sale of houses has lost a lot at once, and the real income is far less than expected.

So how to pay as little tax as possible when selling real estate?

1, self-occupied and rented

One of the best ways to avoid VAT is to live in your own house first and then rent it out. Generally speaking, once you move out, you can't say you live in a house. Can be used flexibly in many cases? The six-year rule? After moving out, the house is still treated as a self-occupied house, and the self-occupied house can be exempted from VAT.

2. Keep the investment period above 12 months.

If you can't avoid paying VAT, pay as little as possible. If you hold the house for at least one year, you can reduce the value-added tax by 50%, and the rest will be added to the owner's normal income and taxed at the corresponding marginal tax rate.

But don't forget, the ownership period of 12 months is calculated from the date when you sign the contract with the seller. For example, if you buy a house in April and complete the transaction in May, then you sell it in March of the following year and complete the transaction in June, but that is not 12 months, which must be counted from the date of signing the contract.

3. Make full use of low-income years.

Value-added tax is closely related to income tax. Therefore, your VAT payment time is particularly critical. If you have a low income for one year and feel that you are in a lower tax bracket than normal, add it up and sell your house before the end of the tax year. Noteworthy include: maternity leave, unemployment, long interval between last job contract and next job contract, unpaid overseas vacation. These are great opportunities.

4. Postpone the contract date

Wait until the next winter to sell the house (that is, July 1), so your tax payment will be delayed for a whole year.

5. Buy real estate with partners.

I found the ideal investment house, but I am worried that it will cost too much. Why not find a partner to buy it together? If you 100% own the property, then you have 100% profit, but you must also pay 100% value-added tax.

If it is a long-term investment, then buy a house in the name of the person who pays the most taxes. If the house is likely to bring positive benefits, buy it in the name of the person with lower income. If it is likely to be negative, buy it in the name of a person with high income.

6. Deposit the profits into your own pension account.

When you sell your house, consider putting some, but not all, of the money you get into your pension account. It's like putting part of your salary into a pension account before tax. This means that you don't have to pay too much tax.

Depending on your age, you can deposit up to 30,000 or 35,000 Australian dollars in your pension account, including 9.5% pension protection. For taxpayers over 55, they can even start the transition period before retirement to save more money.

7. Trust to buy a house.

Another good way is to buy a house with many people in a discretionary trust. The number of people who use the trust mechanism to buy houses is rising steadily, which may be beneficial to people with lower marginal tax rates.

Discretionary trust allows many decisions to be made shortly before the property is sold, so it can be better planned and thus bring better tax results. This allows you to decide which trust member can benefit from selling the house. This means that you can give the profit to the person with the largest tax at that time.

8. Sell the profitable and unprofitable together.

If you have multiple investment properties, some of which are not very good, then consider selling properties with poor returns elsewhere.

Adding the profit from selling one property to the loss from selling another property will reduce the total tax amount. For example, if selling one property brings a profit of A $200,000 and selling another property causes a loss of A $50,000, then your taxable income is A $6,543,800+05,000. Suddenly, your bitter investment at a loss also brought a little sweetness.

9. Declare tax reduction and keep records.

We all know that municipal fees, insurance and property management fees can be declared tax-free, but have you considered all the possibilities? Frequently overlooked expenses include borrowing costs, including mortgage insurance of lending institutions, costs of advertising real estate, including furniture, and expenses originally paid for purchasing the property for investigation.

You also need to pay close attention to your accounts: many people do not include decoration expenses when reporting expenses, but this is actually part of your real estate expenses. The greater the cost, the more value-added tax will be reduced.