Hi all.
I have never sold a property before and am looking for advice as to what costs would be applicable as I am thinking of selling my current PPOR.
I believe the selling cost will be approx 220,000 or closer to 230,000 if we are lucky.
I am guessing that agent fees would be approx 2.5% of sale price but what other fees would be applicable?
The home was purchased as a PPOR in April 2003 for 180,000.
Mortgage was taken out at 205,000 to cover purchase and other costs and have since borrowed additional funds on mortgage so now 210,000 is owing on the property.
(used equity in other property i own instead of deposit)I am wondering if we have to pay capital gains tax and on what amount – the sale price minus the original purchase price or the sale price minus the amount owing to the bank?
I guess there are two choices with the capital gains tax – to use the exemption of it being PPOR or if it isn’t going to cost much because there isn’t a big or any profit to be made then i can save the exemption for the property i am renting out which used to be a PPOR.I hope this makes sense, would appreciate any advice.
Thanks
Tanya
Capital Gains Tax from the ATO
http://www.ato.gov.au/individuals/content.asp?doc=/content/43486.htm
Here is the Tax Office information
This is the way I think it works
Sell $220 000
Less Purchase price $180 000
Less buying costs $25 000
Less Selling costs $7 000 ($5500 commission + $1500 for legals and aadvertising)Total Costs $212 000
Capital Gains $8 000
Taxed on 50% as kept over 12 months $4 000
This gets added to your income for that year you sell.
ChrisAll post are IMHO.
Thanks for your help Chris.
Have a great Easter [biggrin]
Tanya
Hi Tanya
my advice is don’t mess with the ATO! The best thing for you to do is talk to your accountant in the first instance, who will provide the level of advice you require.
As far as agent fees to sell, they will charge for signage, advertising, internet listing, brochures etc, and GST on the commission unless you get it written into your contract the amount payable includes the GST. You will have to pay a conveyancer/solicitor depending on where your property is for organising the settlement and they will charge search fees (just like when you purchase) and if you are discharging a mortgage there will be other fees charged by LTO and your bank! And then if you are lucky there may be some left for you! Bit depressing really when you get right down to it – but hay it’s a good learning experience.
Melinda
Originally posted by tancas:I am thinking of selling my current PPOR.
I am wondering if we have to pay capital gains tax and on what amount – the sale price minus the original purchase price or the sale price minus the amount owing to the bank?
If the property is your PPOR it is CGT free – plain and simple.
In your case it would seem that you had another PPOR prior to this one. If this is the case the first property is CGT free for the period that it was your PPOR and any gains are apportioned over the length of time you owned the property.
Derek
[email protected]
0409 882 958
Property investment advice and researched property in quality locations available.Besides from your PPOE being tax free from CGT, when selling I would recommend using a real estate agent which does not charge you for advertising, to keep costs down.
Cheers,
Gio
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