Hi everyone,
What a fantastic resource this forum is! I can’t seem to get any clear answers to my capital gains tax questions from the ATO website, so maybe someone can help.
Is there any tax benefit for owning an investment property for more than 12 months? I remember hearing something about this once. All I’ve been able to find out is that sale of a primary residence attracts no CGT. We’ve never lived in our property, have only rented it for 4 months (and had a disasterous first experience – we should get vacant possession next week all going well) and prices are good to sell here in Tas.
Any advice, good resources, or experience?
Cheers
If you hold non principal place of residence you pay CGT on the profit at your marginal tax rate.
That CGT is halved after 12 months though.
Simon Macks
Mortgage Hunter
[email protected]
0425 228 985Simon – thanks for the lead. Any more info on that – is it written down in black and white anywhere?
Cheers
You are referring to the discount method, page 15 ATO CGT Guide, Part A;
“discount percentage is 50% for individuals and trusts, 33.3% for super funds.”
Hi Busterk, I know it’s a bit tedious, but you can find a lot of info in the ATO guide to CGT. I think I’ve selected the most appropriate page below:
http://www.ato.gov.au/individuals/content.asp?doc=/content/31570.htm&page=6#P670_56215
Jim.
He who hesitates is sometimes saved!…Thurber.
Thanks all,
I think I’ll be holding onto the house until we’ve had it for 12 months!
Cheers
busterk
[
]busterk
For CGT the 12 months is based on contract dates, not settlement dates unless there are some overiding contract conditions. And the ATO consider 12 mths to be 12 mths and 1 day. Go figure but people have been caught.
Steve
[email protected]G,day all, i learnt from the ATO site that CGT is not a totally seperate tax. Basically you add your capital gain to your salary and whatever tax bracket that puts you into is what tax you are liable for.
Everyone probably already knows that but it was news to me.
Another tip for retirement day was if you are over 50 and have held an (active)asset for 15 or more years, when you sell it is TAX FREE![].Work smarter, not harder!.
Another tip for retirement day was if you are over 50 and have held an (active)asset for 15 or more years, when you sell it is TAX FREE!That’s interesting – where did you find that?
Rod.
Relating to small businesses: sole trader, partner in a partnership, p/l company and trust runing a small business.
Exemptions:
1. After 15 years an asset continuously used AND the individual is over 55 years of age.
2. Usual 50% discount.
3. Lifetime limit of $500,000 for exemption.
4. Rollover providing a deferral of capital gain.Thanks Slim.
I believe that in order to qualify for 15-year exemption or the active asset test you must first pass the basic conditions for the small business concessions, which specifically disallow “assets whose main use is to derive rent” This would count out most of the people likely to be reading the forum. Check the business section on the ato site, if you can stomach it.
CGT… what a joy lol
I looked this up once, its in the free booklets available from the ATO. To not pay CGT on a property, it must be your primary residence. But for how long? some say 6 months, some say 8. A link from ninemsn last week mentioned 4 months. what you do is buy an investment vacant, and “move in” either oficially or just on paper, meaning that you transfer drivers liscence info and a few other things into the new address. after 4-8 months you then move out and rent the place out. BUT this buys you 6 years of not paying CGT.
But i may be wrong… havnt looked it up in ages lolhope it helps… oh and you hav to move into the place on or before settlement, even if its rented out for a week after settlement the rule no longer applies!
There’s a new set of books out this year, with lots of examples. Should be online. You work out the capital gain and apportion it for the days it was/was not your residence. The “was” part is exempt. Then there’s the 6 month rule for changing residences.
I think it’s a good idea to read the books before you talk to an advisor. Not only do you know what they’re on about, but you can sus out the bull artists.
I LOVE the simplified tax system – one sheet and one book is all for a company, 3 books just to get started with the personal return, plus up to half a dozen others to read. They didn’t have the books until way into the new financial year, and I staggered down the street with a foot thick pile of paper!! The ATO doesn’t like trees, that’s why they disallow so many tree-farming schemes!
Hi all.
bought our first house 10yrs ago and moved out of it at the end of june last year to our new home. have been renting the first one since. my question if we were to sell now what sort of CGT would we be likely to pay. with a fix up the valuer has said it would be worth in the low $200.000.
thanks heaps
karenHi everyone, me again
i forgot to mention that we only paid $52,000 for that first house. And if i’d known any of this information we could have made a absolute killing down here back then.[:0)]
Ah well coulda shoulda woulda lol
thanks karenHello,
Just thought I’d let you know that you can make any property you own your primary residence for tax purposes for up to 6 years whilst your not living in it. Of course, you can only have 1 primary residence at any time. This means that your investment property would become your main residence and the home you live in would not be CGT exempt for that period.That’s my understanding anyway.
LuckyoneCan anyone direct me to information that would assist me to understand the positive and negative consequences of purchasing positive cash flow properties under a Pty Ltd company? Main purpose of purchase is to derive rental income.[
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