Need a bit of info. on CGT. Can someone confirm the following:
If I keep a property for 12 months then sell it I get a 50% reduction on the tax I must pay. I understand its calculated as follows for tax purposes: I buy at 150k I sell 200k costs of selling and buying (legal fees, agent commishion, stamp duty) 8k My profit is 42k I pay tax on 21k is this correct ? OR I made 50k profit 1/2 that is 25 k minus my cost as mention 8k is 17k so I pay tax on the 17k. Which of these is it ? Im not yet familure with capital gains only capital losses. Any help in this area would be appriecated.Cheers
Tony B…………………..
You were right in the first attempt tony. If you have any capital losses, these can then be used to offset some or all of your gain as well.
Give the ATO a call and ask them to send out the latest CGT booklet. it has a lot of examples init and will help you see al the different scenarios. It is free. You can search it also on line, but the booklet is easy to flick trough.
Tammyhttp://www.ato.gov.au has the CGT booklet available for download. I think there is also a CGT calculator on there somewhere.
I think it works like this.
Profit $50,000
less buying and selling costs etc of $8
= $42,000
50% discount = $21,000
This $21,000 is then added to your other income.So if you were on the top tax rate you could pay a max of $10,500 in tax – but it is probably much less.
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
If you have capital losses carried forward from previous years then the Capital Gains are offset against the losses prior to the 50% discount.
Carried forward loss – $10000
Gapital Gain – $42000
Net Gain – $32000
Capital Gain after 50% Discount – $16000
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