Today’s tax tip involves a bit of forward planning & a whole lot of trust:
A deed of trust in fact.
But it is a good way of mitigating the dreaded capital gains tax (CGT).
If you’re planning to buy a rental property, you might want to consider doing a deed of trust with your sons & daughters.
You can provide the deposits & have the properties in your sole name, and as long as you share the rental income with your sons & daughters, when you sell the property, the tax due on the gain will be reduced.
For example; if you have three children that you share the property with, the amount subject to capital gains will be reduced by four times the allowance. This is because capital gains are applied to the beneficial owner, not the legal one.
This can be a fine line to tread and professional advice should be sought.