Sorry if this is covered in parts elsewhere.
If a loan is taken out to buy shares that have no dividend history, then that interest on that loan will be taken into consideration when the assets is sold (at a gain for this example) and added to the cost base of the purchase? Right?
And if this is the case is every dollar of interest paid offsetting one dollar of capital gain? Ie. buy 1000 shares for $1 each. sell 1000 shares for $2 each. CG of $1000. Interest paid during holding period of $100. Tax paid on $900??? ($2000-capital-interest?)
And if this is the case can it be beneficial to hold the investment in a lower income earning persons name therefore allowing the max capital gain before reaching a new tax bracket?
This one was raised with me today and I honestly haven’t thought about it.
Cheers.
If a loan is taken out to buy shares that have no dividend history, then that interest on that loan will be taken into consideration when the assets is sold (at a gain for this example) and added to the cost base of the purchase? Right?
And if this is the case is every dollar of interest paid offsetting one dollar of capital gain? Ie. buy 1000 shares for $1 each. sell 1000 shares for $2 each. CG of $1000. Interest paid during holding period of $100. Tax paid on $900??? ($2000-capital-interest?)
And if this is the case can it be beneficial to hold the investment in a lower income earning persons name therefore allowing the max capital gain before reaching a new tax bracket?
This one was raised with me today and I honestly haven’t thought about it.
Cheers.
