Hi all. Just wondering, when you sell an I.P that you have claimed depreciation on, over the years, do you have to pay tax on the claimed depreciation or only have to worry about CGT.
Regards
MartyHi Marty,
You only pay tax on any depreciation claimed on the building, not on the Depreciable Assets/Fixtures and Fittings. In many cases, depreciation claimed on the building is less than that claimed on the Assets.
ScottCan u pls give an eg scott? As i have just started claiming depreciation,but not sure of how it will affect me if i need/want to sell.
Hi Marty and Misty,
Not an accountant so disclaimers apply.
Assume $100K property and with $20K building claims and selling for $200K and $5K capital costs incurred in buying the property.
Effective purchase price is $100K + $5K – $20K = $85K (and not $100K as many think)
CG is therefore $200K – $85K = $115K (I have ignored selling costs).
CG is $57.5K (half of $115 – held for more than 12 months) which is added to your other income and taxed accordingly.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
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