I have 2 investment properties. i plan on moving into one of them in 6 months. if i sell 1 to help pay off the 1 that im moving into how much capital gains will i have to pay?? il make about $120,000.00 in capital gains.
How much other income will you earn in the year you sell the property?
Are you the sole owner of the property? Or what is your % share of the property?
Hi, thanks for your reply. i earn about 30k a year in my job and i am the sole owner of the property.
Also need to know how long you have held the property you are going to sell and whether or not it has ever been you PPOR. Reason. If you’ve held the property for more than 12 months (ie 366 days) you are entitled to a 50% discount on the CGT. If you’ve lived in it at some stage as your PPOR, never declared another property as your PPOR, have been renting it out for less than 6 years…then you can still claim it as your PPOR and not pay any CGT.
Yes, Kelly is right. I made the assumption that you are renting and own the two IP’s with no PPOR status in either.
Please clarify the PPOR situation:
Have you lived in one or both IPs?
Did you live in either prior to it been used to produce rental income?
Provide a time line of your PPOR/occupancy status and income producing status.Assuming no PPOR benefits, there are two outcomes:
Owned the property 365 days or less, 100% CGT. Add the gain to your income for total income. On $30,000 you pay $5,622 tax+medicare. On $150,000 you pay $59,497, or $51,240 on top of your normal tax paid. So you net gain is $120,000 – $51,240 = $68,760 (43% flat rate).
Owned the property 366 days or more, 50% CGT. Add half the gain to your income for total income. On $30,000 you pay $5,622 tax+medicare. On $90,000 you pay $30,397, or $24,775 on top of your normal tax paid. So you net gain is $120,000 – $24,775 = $95,225 (21% flat rate).
With PPOR exemptions or pro-rata concessions this can be reduced dramatically or to nil.
With no PPOR status, I’d suggest waiting, if possible, until the 366+ days are up, if not already. It will make a $26,465 difference just doing that.
Also, make sure your gain is calculated correctly, and is not just the sale price minus the pruchase price. You will be throwing away money.
Michael
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