inlaws

YOU’D NEED TO POST WHAT STATE THEY’RE IN..

PRESUME IT’S THIER PPOR TOO ??

REDWING

“Money is a currency, like electricity and it requires momentum to make it Effective”

Hi (-o_o-)

They won’t pocket all of 85K (210K – 125K). Apart from agent fee they have to pay solicitor fee, loan discharge fee … and capital gain tax on the half of the amount which will be calculated approx. as shown below:

85K – agent fee – stamp duty when they bought – solicitor fees for buy & sell – other expenses + claimed depreciation

Regards

Huey

think you got your figure a little wrong for the net gain…

for the net gain (profit) = (selling price – selling costs) – (purchase price + costs + depreciation claimed) x 50% (if held for more than 1 year) then taxed accordingly to what the net taxable net profit is.

not sure, by what you mean hear, but, if you are talking about a -ve geared property im presuming.

it would be (gross income + rental income) – (tax benefits(could be any paper losses and deductions) + interest incurred) x by the taxable threshold rate = actual net income.

Cheers,
sis

People 4get that by saving just $3 a day & investing it sensibly
over a working life, you’ll end up with around $1 million

sounds like they’d be better to hang onto the property and use the equity to purchase more IPs! (and buy the next IPs in NZ so they don’t have to worry about CGT!)

Hi Sis,

Assuming the following (numbers rounded for ease of explanation).

Bought $100K
Buying costs $5K
Depreciation claimed over period of ownership $10K

Sold $200K
Selling Costs $5K

Net Capital Gain = (200-5)-(100+5-10) = $100K gain

Depreciation is a subtracted under the claw back process under section 40/43 of the tax act.

As the property has been held for more than 12 months the net taxable gain is $50K. This $50K is added to other income sources earned during the financial year.

Assume $40K is earned from other taxable sources then total declarable income is $90K.

From the $90K all allowable deductions (work, investing etc assume $20K) are subtracted to give a taxable income of $70K – this figure determines what the CGT rate is – in this scenario this taxpayer would be liable for total tax of ~$20K.

If on the otherhand the taxpayer had a gross income of $10K (and the same expenses) their total taxable income would be $10K + $50K – $20K = $40K. Tax payable on this would be ~$8K.

That is why any property sales should be done in low (or no) income years as the capital gain tax collected is much less than it otherwise would be in a high income year.

But hey I am not an accountant – and I stand to be corrected.

Derek

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