Wednesday, December 22, 2010

This is going to hurt, the hip pocket

This was getting near the end of a post I wrote but the post was just not working and so I have deleted it. It was about us selling our investment flat and having to pay capital gains tax on the profit. We always did everything by the book and as a consequence, we now both have a decent amount of tax to pay. We could have easily rorted the system and avoided the capital gains tax by officially leaving it empty for a year and saying we or one of us lived there for that period. And of course let to someone unofficially. That would have led to us saving tax dollars of a five figure amount. I am pleased I am not of the character to cheat on tax, but I also think I am stupid.

Investment properties are such a rort. Your home hot water service breaks down? Book it with your friendly plumber to your investment property and make it tax deductible or depreciable. Boy can a good tax accountant do marvellous things with depreciation of assets.

I've not heard any politician propose to stamp out rorts on investment properties. Maybe that is because so many people have them and rort the tax system.

When one person learns of another rorting the tax system, they think to themselves, 'Why shouldn't I?' It puts the tax system at risk and of course 'pay as you earn' taxpayers begrudging paying their tax because they cannot avoid tax like the wealthier members of society.

Written 03/09/10

3 comments:

  1. you are so correct. I know people who have renovated their home and charged it all to the 'investment' property. that's why they invested in it.

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  2. Yeah, it's just like the British MP rorts with the 'flipping' between properties. At the end of the day you have to live with yourself - congrats on choosing to do the right thing, to me that's what Aussie 'mateship' is all about.

    Merry Xmas!

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  3. Yep Emstacks. It doesn't surprise me. I know so many rorts that people can get away with and never get caught. As a wage slave, I don't have that choice.

    I saw that in the paper Red. I can't believe they continue to do it after it was exposed a good while ago. Yep, live with yourself. Good motto.

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