Hi
I have, somewhere in the deep dark depth of my mind, remembered about being told that the CGT of the houses that you own is reduced the longer you own the house.
For example:
Buy PPOR (or IP?) in 1990 and hold onto it for (say) 10 years before selling. CGT is now negligible (sorry have no figures [blush2]) and therefore can be used to pay out other IPs or new PPOR.Can any-one verify (or deny) this! Is there a ready-reckoner for CGT anywhere? I know that most Banks websites now have a calculator for it, but a ready-reckoner would be handy to have for what ever situation may arrise. [cigar]
Cheers
C@34Our greatest weakness lies in giving up. The most certain way to succeed is to always try something one more time.
– Thomas EdisonThat used to be the case – CPI was taken off any gains before the tax was calculated. Each quarter had a CPI figure and it reduced the tax depending on how long you owned it.
Now with the changes that brought in the 50% reduction after 12 months they took that one out in order to simplify things.
Simon Macks
Residential and Commercial Finance Broker[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
I think CGT will become a huge problem for many people in the future. eg you purchase a $200,000 property 7 years ago, now worth $1,000,000. thats a $800,000 gain = $200,000 in extra tax if sold. And it will only get worse!
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Terryw,
sounds like a great reason for buy-n-hold?!!?Unless you keep on borrowing against it…..what a nightmare![snitch]
Cheers
C@34Our greatest weakness lies in giving up. The most certain way to succeed is to always try something one more time.
– Thomas Edisonactually you can choose from the two methods for whichever is more favorable:
the indexing one (with CPIs) – however note index frozen at certain year (cant remember which year, ask an accountant to do the cals)
or the 50% discount method.
It is hard to say which way is better without a calc.
calvin,
The indexation method was used to remove the effect of inflation on capital gains, so you don’t get taxed on the inflation portion of the capital gain. This method stopped when the discount method came in september 1999 when the discount method was introduced.
This method can still be used on property purchased before 1999 but rarely will it provide a better answer than using the discount method.
Rhys
I forgot to add, this only applies to individuals and certain portions of the cost base.
Hi All[biggrin],
A comprehensive guide (25 pages) on Capital Gains Tax is available at the Bantacs website and addresses your concerns, click on the link and then on the e-book Capital Gains Tax.
http://www.bantacs.com.au/booklets.php
A Capital gains tax property exemption tool is available from the ATO
From the introduction on this calculator on the ATO Website
What is the capital gains tax (CGT) property exemption tool?
If you had sole or joint ownership of a property that you sold or are going to sell (or otherwise dispose of), this tool will help you work out what proportion of your capital gain is exempt from capital gains tax. In the report at the end of the tool you will be given a percentage assessable, not a monetary figure.
Who is the CGT property exemption tool for?
This tool is for individuals who want to find out what proportion of their capital gain is exempt from tax on disposal of, for example, a:
• home
• home that they have lived in and vacated for a period of time
• home, part of which has been used to produce income
• rental property, or vacant block of land.The link is below
http://calculators.ato.gov.au/scripts/axos/axos.asp?CONTEXT=&KBS=CGT_AND_REAL_PROPERTY.XR4&go=ok
I hope the above information is of use
Regards
Bryce Inglis
Financial Advisor
[email protected]Replies on this site are intended as general information only, as any specific investment solutions/advice must only be given in accordance with the requirements set out in the Financial Services Reform Act 2001 and the ASIC guidelines as set out in PS146.An appropriate professional should be consulted for specific advice
Chinapower. Nihao.
I think that is only possible for properties purchased before a certain time. Those purchased later cannot opt for the indexing method.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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