Hi all,
looking to purchase a 35-40yrd old front unit for $275k (buy for $290k?) which I will renovate kitchen and bathroom w/ new tiles.
There is a 35-40yo house on the same street asking $370k+ 700sqm and another on the next block for a 30yo front unit 2BR for $274k. Newer unit go for $350-450k.
what do you think capital gains would be on this sort of project?
cheers!
Capital gain = sell price minus base cost
Base cost is what it cost you to buy the asset usually purchase cost plus buying costs. If you make a capital improvement this may be able to be added to your base cost. however if you depreciate or claim buying costs as a tax deduction it is removed from your cost base.
Look up http://www.ato.gov.au for current tax laws on capital gain. If you hold the asset for 12 months you may be able to reduce the gain by 50%
you will need to check if this is still the case. If you want to know the capital gain seek a property valuer to give you an estimate on the renovated likely sell price.It would be a good idea to talk to an accountant. A 50 / 50 joint ownership can split the capital gain between two people or look at buying in lower income earners name.Capital gain would also largely depend on the area.
Terryw
Discover Home Loans
Parramatta
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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