Good afternoon all,
Could someone please clarify for me the 50% discount on CGT for a property held for more than 12 months?
Does the 12 months start from when my initial offer was accepted or the initial settlement date? In addition when I sell, in relation to the 50% discount what date is taken into consideration, the date of listing, the date of offer acceptance or the settlement date?
Thanks in advance for your assistance.
[cigar]David
Hi David
It is very simple it is taken from the date of the Contract.
Assume you see a property you want to buy, sign the contract on 1st January 2007 but settle at the end of March. You list the property for sale in December of that year.
The discount would only apply if the Contract was dated after 2nd January 2008. I would allow a few extra days to be on the safe side.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
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Hi David,
Yes Richard is spot on as usual. Here’s an extract of a document off our website that explains further about CGT:
Capital Gains Tax (CGT) is the tax paid on any Net Capital Gain made on an asset that is sold, and is included in your Income Tax Return. CGT is not a separate tax but forms part of your income tax payable.
The system has changed over the years since inception on 19th September, 1985 so we recommend you seek independent professional advice from your Accountant.
Two methods to calculate CGT
(1) Indexation
Applies to property purchased up to 21 September, 1999 where the cost base is indexed according to inflation.(2) Discount (Current Method)
A 50% discount (on assets held at least 12 months) is applied to your Net Capital Gain. This discounted amount forms part of your taxable income and is taxed at your marginal rate, up to a maximum of 48.5%One third discount applies to Superannuation Funds and there is no discount for Companies.
Keeping records
You must keep your records for 5 years from the date you sell the property.Balancing Charge
To calculate the capital gain your Accountant may need to reduce the “Cost Base†to the extent that it includes amounts you have previously claimed for Depreciation and Capital Works deductions.
If you are intending to sell a property, we strongly advise that you discuss this issue of GCT with your Accountant before you sell the property, to ensure that you are aware of the CGT implications.What date on the contract is used to assess CGT?
The date on the Contract of Sale is used for CGT purposes – regardless of when settlement occurs.Hope this answers your question.
AmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
Thanks Richard & Amanda
David
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