What is the best way to treat the sale of an investment property if it is your sole form of income? Is it subject to CGT, or regular Income tax?
Speak to your accountant.
Is the property in your name, a company name, etc – these things affect the outcome.
The sale of any income producing invetment that increases in value is subject to CGT.
If it is your sole source of income, any profit from the cashflow will be taxable as well.
The good news is that if you don't earn much income from the rent after expenses and your tax rate is very low then you won't have a lot of CGT tax to pay most likely.You'll pay less tax if the gain is declared a capital gain rather than revenue because if held for more than a year you will receive a 50% discount on the profit(unless your a company).
It doesn't matter if it is your only source of income, but if you're in the business of buying and selling properties. Is it a one off? or have you done this a few times in the past year or 2, do you intend to do it again over the next 2 years?
If it is a frequent act, then you would be declared to be in the business of it. In this case the income and expenses would be declared to be ordinary as opposed to CGT
To help reduce the CGT you can contribute funds into your super and receive a tax deduction. Talk this over with your Accountant first to ensure you're eligible.
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