We have built an investment property with the initial intention to rent the property out. Once the property was completed we decided to move in to it as our PPOR. We have lived in the property for three months while having our old PPOR rented out. We have now decided we would rather live in our old PPOR (while house is inferior land size is larger for our young childrento play) and intend to move back and sell the property we initially built as a rental. We are happy to pay CGT but are not sure how to calculate this. Can anyone help?.
ned kelly
CGT basically is a 50% disscount on your normal tax rate
E.G. If you made $70,000 profit and you paid normal tax (lets say your tax rate is 48.5% this is the highest tax rate, due to your earning from your normal job ) then your tax bill on the extra $70,000 you made for the year would be 48.5% of $70,000 = $33,950 tax.
CGT gives you a 50% disscount so in this case it would look like this $70,000 profit you get a 50% so you only pay tax on $35,000 at your tax rate of 48.5% =$16,975 tax.
Hope this gives you an idea of how it works.
In the case you brought forward I don’t think you will have to pay any tax if you lived in the property and never rented it out then the way I see it is it your PPOR so there souldnt be any tax to be paid . unless you have already started to claim your payments. But even then there maight be a way out of it .
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[email protected]Hello Nedkelly
You might find this a help. I’d still advise you to check with an accountant before you do anything else.
http://www.ato.gov.au/individuals/content.asp?doc=/content/cgt_guide.htm&page=14
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