I know this has probably been discussed before but Im hoping with figures, that someone can explain CGT to me in plain english. In particular the amount of tax I may be subject upon selling a property.
I purchased a property in Victoria for 128k 3.5yrs ago and lets say it sells for 180k now – 52k gain. Of this 52k how much would I expect to pay in tax? I lived in the property for 6months and only moved out b/c of an unbearable neighbour.
It was my only property until recently (sept 04) so Im wondering is there a way I could claim this property as my primary residence even though I wasn’t living in it and thus limit the CGT payable?
Other considerations: my income now is 50k+
—
Thanks,
Pottzp.s. I do plan on seeking professional advice but thought I’d get someone feedback from here 1st.
—
PotterIT – Cheap Domain Registrations & Web Hosting
http://www.potterit.com.auYou would be CGT exempt because it was your PPOR and although you moved out to use it as a revenue generating property (rental) you have 6 years in which you can do this, provided you do not claim another property as your PPOR at the same time. But even if you do, you have 6 months transition in which time you can do so. And from Sept 04 to now still qualifies you as being able to do the latter anyway.
There are 2 methods of CGT calculation (discounted and indexed), a guide using discounted is as follows:
The profit from the sale of 52K is discounted by 50% leaving a taxable profit of 26K. Then this 26K is added to your taxable income for the year; taking your total taxable income for that year (50+26) 76K and you will taxed on that amount as per the normal scaling system.
The reason WHY you moved out (ie. bad neighbour) is of no interest to the ATO and has no bearing on the amount of CGT.
Hope this helps somewhat.
Cheers,
Jo
If you initially lived in the property and had only one, it may be CGT exempt. If you rented it out first, then you may have to pay CGT on a portion.
Generally CGT would be calculated based on profit less costs such as stamp duty, legals etc. this is then halved and that is added to your other income.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
Click below to email meTerryw | 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
Also, don’t forget that if you were to be paying capital gains tax on the property, the depreciation that you had claimed in your tax returns from the time it was rented would have to be deducted from the purchase price.
Talk to your accountant. Maybe you need to get the property values as at when you moved out. Haven’t got my books with me to give you a reference.
I would be surprised to see a huge variation on price values between Sept 04 and Jan 05.[blink] Even so, if it was a PPOR from the word go THERE IS NO CGT to be calculated hence no need for a valuation.[biggrin]
Thanks guys & girls!
All your comments are very much appreciated.
—
Cheers,
Pottz—
PotterIT – Cheap Domain Registrations & Web Hosting
http://www.potterit.com.au
You must be logged in to reply to this topic. If you don't have an account, you can register here.
