ATO’s Verdict on Multiple Commercial Property Investments

If you have multiple commercial properties in your portfolio and you are not sure what kind of capital gains tax concessions apply to them. You are not the only investor caught in such a dilemma with regards to multiple property investments. The Australian Tax Authority (ATO) has got a protocol for treating small business CGT concessions and it is based on whether they treat the property as an active asset or a passive one.

CGT concessions

As an investor, you are either leasing properties or you are generating a positive cash flow through rental returns on them. If it is the latter case, you are unlikely to receive CGT concessions and if it is the former case, the ATO will dutifully analyse certain imperatives before giving you the welcome news that you are eligible for a 50% CGT rebate.

Active versus passive assets

So what does the ATO check if you are into the business of leasing properties? You might say to your heart’s content, considering that your multiple property investments should be treated as active assets and that you are negotiating with tenants, undertaking inspections and carrying on repair works and so on. However, the ATO can still categorize your property as a passive asset if all you are doing is fetching rental returns through them.

Negative gearing

In many ways, the old debate between positively and negatively geared properties comes into the picture. Negative gearing and CGT concessions are already being hotly talked about, aren’t they? This concern regarding multiple property investments and leasing properties might become much more complicated in the future. It is best if you contact a lawyer you can trust and talk about your responsibilities and rights with this protocol.

Have you faced problems with CGT concessions or during transferring your property to the trust?