I brought a property less than 4 years ago and it has been rented out for just over 18months, now I want to sell it. Just wondering how it is calulated?
Paid 82k
Owe about 60k
Real Estate reckon I will get about 289kthanks
MatMat
The loan amount is immaterial.
The three methods of calculating capital gains are summarised and compared in the following table. In some cases, you may be able to choose either the discount method or the indexation method to calculate your capital gain. In this case, use the method that gives you the better result.
Indexation method
Discount method
'Other' method
Description of method
Allows you to increase the cost base by applying an indexation factor based on CPI up to September 1999.
Allows you to discount your capital gain (by 50% for individuals and trusts, and 33 1/3% for complying superannuation funds).
Basic method of subtracting the cost base from the capital proceeds.
When to use the method
Use for an asset held for 12 months or more if it produces a better result than the discount method. Use only for assets acquired before 21 September 1999.
Use for an asset held for 12 months or more if it produces a better result than the indexation method.
Use when the indexation and discount methods do not apply (for example, if you have bought and sold an asset within 12 months).
On the basis you use the Discount method you would deduct all selling costs from the end sale price and add to the cost base any stamp duty or Building Write off claimed.
If you assume that these came to $200K then you would declare a capital gain of $100K and this would be taxed at your marginal tax rate for the year in which you signed the sale contract.
Richard Taylor | Australia's leading private lender
If it was your PPOR from when you bought until you started renting it, you might qualify for the PPOR exemption. Talk to your accountant
Excellent point crj the 6 year PPOR exemption rule will apply if you have lived in the property at all.
Richard Taylor | Australia's leading private lender
Roughly, like this:
Selling Price = $282,000
less purchase price = $82,000
Less purchase costs and selling costs, say $20,000
= $180,000
Subject this to the 50% discount = $90,000
This amount would be added to your income for the year. so the max you should pay is around $45,000 in CGT.If owned jointly, this $90,000 would be divided amongst the other owners.
But, if you have lived in it intially and do not have any other property as your main residence, you could probably claim a full exemption.
Terryw | 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
Yeah I lived in it for about two years, and have owned it less than six years There ya go then it is CGT exempt.
Richard Taylor | Australia's leading private lender
seals139 wrote:Yeah I lived in it for about two years, and have owned it less than six years Sorry Richard but I disagree with you here! This alone does not make the property CGT exempt. You can only ever claim one PPOR at a time. Seals, where did you live for the other 4 years? For example if you rented or lived with parents for those 4 years you may be Ok and not pay CGT, however if you owned and lived in another property as your home then CGT will apply to some portion.
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