Hi All
New here, I did some renovation in the UK, now I'm in OZ I want to do some projects here.
Quick question, I am looking at a apartment refurb, total costs to me which including buying apartment, renovation etc will be approx 500k. Once complete will be looking at high 500's.
Now what is the best exit:-
1) Sell as soon as renovation is finished (3 months after purchase)
2) Renovate, rent for 12 months, then sell.
3) Renovate, hold empty for 12 months then sell.Thanks Sean
If it will be a main residence there shouldn't be any CGT so sellingquick should save you interest. If it is an investment holding on for 12 months may save you CGT – so work out if the savings will be more than the holding costs.
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
Thanks Terry
Thats what I assumed. What are the CGT rates in NSW, I have tried searching and can;t find them. This is an IP.
CGT is a commonwealth tax – same in every state. There is no rate, but the CG is worked out and added to your other income. So if you have no income it could be low (depending on how big the gain is). Max will be the top tax rate if you are already earning about $130,000 pa income. If you held the asset for 12 months it would get the 50% discount, so max 23% approx. plus medicare.
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
Terryw wrote:CGT is a commonwealth tax – same in every state. There is no rate, but the CG is worked out and added to your other income. So if you have no income it could be low (depending on how big the gain is).No income first $6000 is tax free threshold if you are a resident tax payer
$6001 to $34,000 taxed at 15%
$34001 to $80,000 taxed at 30%
$80,001 to $180,000 taxed at 40%
$180,001 to whatever taxed at 45%
Plus 1.5 % taxed for medicare.
http://www.ato.gov.au/individuals/content.asp?doc=/content/12333.htmTerryw wrote:Max will be the top tax rate if you are already earning about $130,000 pa income. If you held the asset for 12 months it would get the 50% discount, so max 23% approx. plus medicare.Yes !
However if property is joint owned you have to split the capital gain between the two joint owners (haven't calculated this though)
$130,000 + 50,000 capital gain taxed at 41.5%
12 month discount $130,000 + (up tp 100,000 capital gain / 2) taxed at 41.5% which works out to 20.75% of orginal capital gain
gain is reduced by 50% then added to income
Gain of over $100,000 say 200,000 capital gain.
$130,000 + 50,000 capital gain taxed at 41.5%
12 month discount $130,000 + (100,000 capital gain / 2) taxed at 41.5% which works out to 20.75% of original capital gain
Plus
< 12 months ____ $over 50,000 capital gain taxed at 46.5%
>12 months
12 month discount $over (100,000 capital gain / 2) taxed at 46.5% which works out to 23.25% of original capital gain over $100,000You have to stagger the amount for the brackets.
on $130,000 wage
say 50% discount
say 200,000 gain
$100,000 /2 = $50,000 taxed at 41.5% = $20750
$100,000/2 = $50,000 taxed at 46.5% = $23250
Add together 44,000
44,000/ 200,000 = 22%you have to stagger the amount for the brackets.
on $130,000 wage
say 50% discount
say 400,000 gain
$100,000 /2 = $50,000 taxed at 41.5% = $20750
$300,000/2 = $150,000 taxed at 46.5% = $69750
Add together 90.500
90,500/ 400,000 =22.65%I was a bit out with my top rate!
So you need to earn $180,000 pa plus before you are on the top marginal rate.
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
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