Hi Everybody,
I have a quick question?Property "X" I purchased in 2001 and lived in for 12mths, till 2002. it has been leased since then. I am now thinking of selling the property, can anyone give me an idea on the capital gains tax?
I cant remeber if it becomes and IP after 5 or 6 years??
my accountant as usual, is taking his time on his answers………….it is in Perth, and has made a CG of around 220K,
thanks everyone, have a great day.
JI'm certainly no expert in this field, but I think if you've had an investment property longer than 12 months you pay CGT on 50% of the capital gain, as opposed to 100% if you sell within 12 months. Also, as you lived in the property for 1 year I think the CGT is calculated on the time it was used to derive a profit (leased), which means that of the 220K CG of the property a valuation may be needed to determine what proportion of this CG occurred while you lived there and then deduct this amount from the calculation. For example, you've had the property for 6 years with a CG of 220K – lets assume it was a steady incremental rise each year (for the purpose of this example), then the CG for each year is $36,666. Deduct this from the one year you lived there and the CG over the investment term (5 years) is $183,333. CG applies to 50% of this, which makes it $91,666. This is the amount which is used to calculate the CG based on your nominal tax rate. So if your tax rate is, say, 48% then your CG bill would be about $44,000.
Again, I'm no expert but I think it works something like this.
Good luck
Hello J
The rule is … up to 6 years. Before this time you can even move in again for a few months and start the 6 year rule again.
This all assumes that you haven't bought another PPOR in the mean time. If that's the case then up to 6 years you are CGT free.Here is a link to a good explination by Terry if you have bought another home in the mean time.
https://www.propertyinvesting.com/forums/getting-technical/legal-accounting/4322421
Hope this helps
ElkaThanks guys for your post,
both very helpful indeed. My account also confirmed and informed me of the procedure.
as I have lived in the property, yes I do have 6 years. of this i have another 11 months to sell, CGT free.
if I decide not to sell I can-
A) get an evaluation done, and start the Capital Gain Period from that date, ( Oct 08)
move back in to the property for anotheryear and start again,
C) sell the property nowthe the investment brain, keeps on ticking….
thanks again,
J
move back in to the property for anotheryear and start again, You must be logged in to reply to this topic. If you don't have an account, you can register here.
