When an investment property is jointly shared (50%) between husband/wife and one sells their half to the other, how is capital gains tax worked out. For example if the property was bought 5 years ago for $100,000 and now worth $240,000 and one partner buys the 50% share off the other for $120,000, is the capital gains worked out by taking the amount the Investment property was initially bought for at $100,000 from the change over cost of $120,000 ($120,000-$100,000) bringing a capital gains of $20,000, then half that because the investment property has been owned for more than one year leaving $10,000.
Or is the capital gains worked out by taking the amount initially bought for at $100,000 but halved because of joint owner ship ($100,000/2 partners =$50,000) bringing a capital gains of $70,000 ($120,000-$50,000) then half that because the investment property has been owned more than one year leaving $35,000.Thank you for any assistance you can provide.
Hi Pete, your second calculation is right, because it's a 50/50 share, you need to divide the purchase price by 2.
So your half of the purchase price is $50,000, and your sale price is $120,000 = $70,000 difference. With the 50% concession for holding the property longer than 12 months, the amount that capital gains tax will apply to is $35,000.
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