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 Peet
I think it would work like this:
Base $100,000
Sale $240,000
Gain $140,000
50% discount on CG if held more than 12 months = $70,000But only half is sold so 50% of this is $35,000
This goes on the top of the taxable income of the person who sold it. But don't forget other costs such as legals on buying and selling and stamp duty can be taken off the profit, before the discount.
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
Hello Terry
Thank you.
Regards Pete (Peet)
Also remember any Building Write Off which has been claimed during the period of ownership needs to be taken off the Cost Base.
Richard Taylor | Australia's leading private lender
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