Hi everyone,
I’m new to the forum. I’ve been reading through some of the topics but there is one thing I’m not certain about. That is captial gains tax.
I own a property in St James (Perth). We only purchased this at the beginning of the year. Now with the captial gains tax, that applies when you sell you investment property. So how much do the government tax you on this?
I read somewhere it was like 48%!!! is that true?
Any info would be appreciated.
Thanks
Quote:Hi,Captial gain is paid at your personal tax rate, on the whole gain before 12 months or on 50% of the gain after holding the investment for more than 12 months.
Capital gain for a company is 30% on the whole gain.
Hope this helps.
Regards,
Ross.
Ok,
I just read one of Steve McKnights post about captial gains tax.
Below is what he has to say about this topic.
I imagine that you own the property in joint names or at least in one name as an individual (as opposed to a company).
This being the case you will qualify for a 50% exemption.
Ideally the would have the following effect:
Capital Gain: $100,000
Split 50:50 means you have a taxable capital gain of $50,000.
Then you both qualify for a 50% capital gains discount meaning that you will be paying tax on only $25,000 (each) of it.
I’m not sure how much other income you have, but, assuming you have none, tax on $25,000 is $3,880.
So, on a gain of $100,000 you might be able to knock it down to $3,880 * 2 (people) = $7,760.
I think I kinda understand it now. Before I thought they would charge you 50% of the captial growth of you property. If I’m wrong, can you let me know
Thanks.
I’d also like to add extra info by saying that your selling price also has a base which includes the agent’s commission, advertising and conveyancing costs.
So with Michael’s example:
Total base cost = $110,500. Sale price is $135,000, so your gain is $24,500.Sale price less conveyancing ($500), Commission ($3,000) and advertising ($1,500) = $135,000 minus $5,000 = $130,000.
So CGT wll be calculated on $130,000 minus $110,500 = $19,500.
Not purchase price ($100,000) minus selling price ($135,000) = $35,000.Obviously it’s better to pay CGT on $19,500 than $35,000 so make sure you include all your applicable costs to reduce the amount between buying and selling price as much as possible.
As Ross said, CGT is payable at your marginal tax rate so it’s obviously best to trigger a CGT event in a financial year when you have a small taxable income, eg after retirement.
Fantastic, thanks for all the info guys. I really appreciate it.
I won’t be selling the property for a while though. Just curious about the CGT. I just didn’t want to work so hard for them to tax so much.
Is there anyone on the board that has a property in St James or near it.
I’m confident that I chose a really good suburb. They are planning on redeveloping Burswood which is like only 2km away. I think they’re spending like $700 million on building new appartments. Its Mirvac Fini that are doing the development.
This is the link if anyone is interest.
Call up the ATO. They will send you the Guide to Capital Gains Tax booklet for free.
Hello Petrus I bought a property on a corner duplex block in ST James about 15 years ago for $37,500. I think you could add a zero to it for todays value,wish i still had it/ think hard about keeping yours. Regards Andy.
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