How much CGT would be payable?

Viewing 6 posts - 1 through 6 (of 6 total)

norto1
Member
@norto1
Join Date: 2009
Post Count: 6
January 1, 2010 - 11:08 pm
G'Day All,
Just wondering how much capital gains tax i would pay on the following scenario.
Purchase investment property in August 09 for $232k sell before August 2010 for $260k. And the same situation but after August 2010. I'm just not sure how CGT is calculated and what it will cost me given the scenario. I know you should not sell your IP but there could be an opportunity coming up this year and to invest I would need to sell this house.
Any help would be great. Thanks.
Regards,
Norto
demkel
Participant
@demkel
Join Date: 2006
Post Count: 49
January 1, 2010 - 11:23 pm
Hello Norto
I think you pay CGT on the $28k profit at your marginal tax rate if you sell within 12 months whereas you pay CGT at your marginal tax rate on $14k (50% discount) if you sell after 12 months. Please correct me if I am wrong.
Regards
Demkel
YoungInvestor
Participant
@younginvestor
Join Date: 2003
Post Count: 377
January 1, 2010 - 11:45 pm
Hi Norto,
Steve has a chapter in his new book about the life cycle of an investment property.
The overarching theory is that there is nothing wrong with selling an IP if the new opportunity will give you a better return.
You just need to bare in mind the buying, selling and taxation costs associated, and make sure the new venture will still give you a better return.
Regards,
YI
crj
Participant
@crj
Join Date: 2004
Post Count: 618
January 2, 2010 - 2:25 am
Bear in mind purchase costs such as stamp duty, legal fees and selling costs such as agent's fees form part of your cost base.
The date of the contract is what is important for calculating whether the 50% discount for CT applies.
norto1
Member
@norto1
Join Date: 2009
Post Count: 6
January 2, 2010 - 3:26 am
Thanks heaps for the replies,
Yeah we have taken all that on board with regard to the new opportunity the only thing we had not calculated was the CGT so it's good to know where we will stand with regard to it, so we can better work out if the new venture is viable or not.
Norto
Grow SMSF
Participant
@evolve
Join Date: 2009
Post Count: 66
January 9, 2010 - 6:43 am
The actual CGT is often not as much as people expect.
Talk to your account BEFORE signing a contract and see if anything further can be done in advance to reduce your taxable income and hence reduce the additional tax when the capital gain is lumped on top of your other taxable income.
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