3 ms·
If you claim the maximum you can claim, take advantage of negative gearing, property depreciation, tax free capital gains on primary residence, one of the many
by mc3 7y ago
If you claim the maximum you can claim, take advantage of negative gearing, property depreciation, tax free capital gains on primary residence, one of the many parental rebates/handouts that are or have been available to middle class on good incomes, various arrangements to get around paying tax on shares from your company, etc. etc. then yes you are probably getting away with paying less tax by knowing the rules, whereas the uninformed wont. Where the line is drawn between this and say domiciling elsewhere to avoid tax, going to work in Singapore for a few years and bringing the money back or whatever, all the way to doing what the big corps do to systematically avoid billions in tax - who knows?
- girvo 7y agoI, personally, don't do any of that: I don't own property, which the bulk of those schemes require, and I don't have children, which the other set usually does. No trusts or anything involved to reduce my tax burden. I pay what I pay, basically, because I fall into the slightly weird edge-case of having a decent salary but none of the other things that would give me access to these sorts of systems for better or worse. Doesn't really worry me though, I earn more than enough for a happy life!
- buboard 7y agoGood for you, but unless you are avoiding these situations on purpose, or promise to pay above what's legally required for taxes, you can't claim ethical superiority than those that do.
- girvo 7y agoWhere did I claim “ethical superiority”? I was accused of doing something, I explained that I did not. No need to be rude about it either, thanks.
- ip26 7y agoClaiming the home sale exemption is not exploiting the tax code any more than claiming the standard deduction. If you don't claim depreciation on your rental property, the IRS will still recapture when you sell it- even though you didn't take it. So how is taking it an exploitation?
- mc3 7y agoWell how do you define exploiting? For example well-off person buys a house, improves the value, sells it tax free, makes a couple years salary in profit tax free, repeats it again and again. Property ladder on steroids. The intent of no CGT tax on your primary property is IMO security for families, but it can be exploited to make a regular alternative source of income tax free.
- ip26 7y agoThe point of the home sale exclusion is to allow you to move. The presumption is that when you sell your primary, you are likely using the proceeds to buy another primary- which has probably gone up in value just as much as your old house. Exploiting would be more like renting a house out for twenty years and then claiming it as your primary just long enough to sell & claim the exclusion, maybe without even renting out your original-primary. The resident-renovator isn't something I worry about. You might be getting a tax break on your sweat equity but improving a house is hard work and when you run the numbers it's often not much more profitable than working a day job.