Tuesday, June 23rd, 2015

Bad Advice

I saw two web pages giving bad financial advice today.

The first was to a couple wanting to move into one of their rental properties. The advise was to see if the loans could be refinanced across the other properties leaving the one to be used as their residence with no mortgage. Since the tax deductibility of loans is based on what they were originally for and not what property they are on such a refinance would make no difference to the deductibility of the loans other than to make it harder to work out the deductible portion and probably increase the cost of the accounting required to work out the portion of the loans applicable to their residence.

The other was relating to a property in a super fund purchased before 1985 where the advice was that there would be no capital gains tax on the sale. In fact only by going fully into pension mode would there be no capital gains tax as all super fund assets regardless of their purchase date have been subject to capital gains tax since 1st July 1988.So most likely the gain would be taxable.

Just goes to show that you shouldn’t believe anything a financial adviser tells you without first checking it with your accountant (assuming you have a good accountant that knows the tax laws properly).

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