Hi All,
My husband and I pull in about $100 000 a year. My part-time portion is only $30 000. If I was to buy a property just in my name only to renovate and sell, would I have to pay GST on the profits? If so, then at what rate?
Thanking you,
TinaHi there again,
Sorry, disregard last post. I meant Capital Gains Tax not GST. Just read another post regarding GST before posting mine, so must have got it stuck in my head. Will I have to pay Capital Gains tax on my reno and on sell if I purchase the property and have an income of $30 000? Combined income is $100 000.
Cheers,
TinaNot an easy question to answer
Are you planning to rent out the property?
(yes to paying CGT) but if you are then you can't claim the cost of the reno , holding costs, borrowing costs on to the cost base and thus reduce cgt.
Are you planning on living in the house?
(maybe no to paying CGT) as CGT ppor /main dewelling exemption could apply
Are you planning on not renting it out and not living in it ?
(Yes to paying CGT but costs can be added to the cost base like interest, insurance, rates, reno costs and reduce the CGT.Next likely question how much
Capital gain over 12 months 50% discount applies
taxable CGT = capital gain /2
If jointly owned property you then split this figure again by 2
Taxable CGT = Capital gain /4 if 50% discount applies.
So now first $4000 of 1/4 of capital gain is taxable at 15% and the next $46,000 of 1/4 of cap gain taxed at 30% ($30,000 wage)
so othert partners share of capital gain up to $80000 of 1/4 of capital gain of 320,000 is taxable at 40% ($100,000 wage)if owned by $30,000 wage earner only
Capital gain over 12 months 50% discount applies
taxable CGT = capital gain /2So now first $4000 of 1/2 of capital gain is taxable at 15% and the next $46,000 of 1/2 of cap gain taxed at 30% ($30,000 wage)
so next $100,000 of 1/2 of capital gain of $200,000 is taxable at 40% ($30,000 wage)
then next amount after this is 45% tax over 150,000 capital gain/2 really is $300,000 and over with 50% discount.
see tax scales
http://www.ato.gov.au/individuals/content.asp?doc=/Content/12333.htmsee next web site links for more info
http://www.ato.gov.au/individuals/content.asp?doc=/Content/00135935.htmhttp://www.ato.gov.au/individuals/content.asp?doc=/Content/00135932.htm
http://www.ato.gov.au/individuals/content.asp?doc=/Content/36557.htm&page=2&H2
http://www.ato.gov.au/individuals/content.asp?doc=/Content/36919.htm
Hi duckster,
Thanks for the reply… I plan on selling it when reno is complete. Hoping to do 2-3 a year…don't know whether this will turn out. Anyway, thank you again. Have a great day.
Tina
Any profit from the CG is added to your income after deducting expenses and the 50% discount if held more than 12months. So you would be paying some tax, but it may not be too bad when you consider it will be a max of 24%
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
You must be logged in to reply to this topic. If you don't have an account, you can register here.
