Hello everyone,
i am about to sell one of my IP (1st time selling). I am after feedback on my calculations…
purchased in 2008 for $300,000 as PPOR (borrowed at 80%). Lived in it for 7 months and have rented property since.
Took some equity out of property in mid 2012 to purchase another IP.
Current mortgage is $279,600.
House was valued by the banks at $350,000 in June 2012 (when gaining access to equity).
Property has been renting for 300-340/wk so has been neutral geared throughout.
Based on the above, are the following sums correct?
selling price $350,000
agent fees $8750
legal fees $1000
mortgage $279,600
gross profit – $60,650
Capitol gains tax (32.5c tax bracket) – $7,500 based on yourmortgage.com.au calculator
Net profit – $53,150
do I then subtract the initial $14,000 stamp duty fee or the $60,000 for initial deposit from this net profit to determine actual profit /loss?
i know I am not including other expenses such as rates / repairs etc although as I mentioned, the property has been extremely close to neutrally geared throughout. So for the sake of the sums, I will leave these out for now.
Any help would be greatly appreciated.
Thanks.
GP = SP – Purchase cost – legals(both purchase & selling) – agent comms – stamp duty + depreciation claimed
GP = 350000-300000-1000 – 14,000= 35000
Discount for ownership greater than 12 months = 50%
So you then apply your MRT to the balance of $17,500
essentially, half of not much.
If you moved into it as soon as possible after you settled and did not claim any other property as your PPOR and did not have a partner who had a Ppor then you probably will not have to pay Cgt
Remember your Cost Base might need to be adjusted by the amount of any Capital Allowance you have claimed already whilst the property was rented out.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
hi all,
i would like to add a point of discussion if i may. i am in a similar boat to EdmundSt. i have IP1 currently being vacated by tenants this weekend. i engaged a building inspector for the property as there has been some movement in the house due to the locaiton being in the hills of perth. the outcome of the inspection was that half of the house is moving down the hill and splitting on the walls and possibly the foundations. there are also some big trees in the back yard, the roots are lifting up the house. So i am going to have to patch up the cracks internally and externally, re-paint ready for either another tenant to go in there or just sell it on now. The issue with getting another tenant in there is that after two years the cracks will be back again and i will have to go through the same process if i want to sell in on in 2 years time.
I have 252k mortgage on the IP and the real estate agents think it could get 375-395k. the plan is to re-invest the profits into another IP for off the plan or home and land package so i can maximise the tax offsets for IP's.
question is should i keep the IP or cut my losses and sell it after 3 years of ownership? i need to work out how i can do the repairs cheaply and quickly in order to do either options.
cheers
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