Capital Gains Tax < Property Tax < Property < Keys To Succcess Club
Capital Gains Tax is a tax that is imposed on your property. There are different rules applied to a property you own and live in (principal place of residence) compared to one that you invest in. It can get a little complicated if you have originally owned and lived in and then move out of so check with your accountant on this.
Of course Capital Gains Tax means that you have pay out of your profit when you sell and you need to take this into account when you are considering your exit strategy. It is vital in property investing to consider your exit strategy and make sure you take into account all the different aspects. By the time you have taken into account the entry costs, any running costs and then all the exit costs you may find that despite the property going up in value your net return may be zero or even –ve.
It is at the point of selling that people who have large depreciation element to their property (which is helpful in cashflows whilst you hold the property) get hit with an –ve impact at the point of sale.
It is for all the above reasons that many investors decide as a general principle not to sell their property. They use a refinancing strategy to access the capital growth.
So, remember to a) understand what capital gains tax is and b) determine your exit strategy BEFORE you invest in a property!
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Keys To Succcess Club > Property > Property Tax > Capital Gains Tax