Do I have to pay capital gains tax?
Question from Bruce updated on 31st July 2007:
Our expert responded:
Whether or not tax is payable on a capital gain made on the sale of a property comes down to the intention of the purchaser at the time the property is purchased. So, if your intention at the time of purchase is to sell the property and make a profit, then you will have to pay tax on any profit you make. If your intention is to own the property long term and build a home or rental property on it, then on that basis, if you did happen to sell the property at some stage in the future, there should be no tax payable on any capital profit. When buying property, it is a good idea to document your intention at the time of purchase to ensure you aren't paying tax when you shouldn't be.
Kenina Court is a director of Acorn Solutions Limited, an accounting firm dedicated to working with clients to help them create wealth. She is an avid property investor, entrepreneur and seminar presenter on asset protection and wealth strategies.