Hi Everyone
could some one please answer some of my questions i bought a unit 1 1/2 years ago for $40 000 and now have sold it for $110 000 i know i will have to pay captial gains tax but will i have to pay tax on the profit cause i earn about $26000 a year plus the profit will put me over the $50000 mark or are there other ways around it i have another house which i still owe money on it is an investment or can i use the money before next financal year and buy more houses.
any responce would be great..
Thanks Rob.
My advice would be to see an accountant. I assume this unit is not your PPOR – You do have a capital gain of $70k which means you have to add $35k to your salary.
So in effect you will be paying tax on a taxalbe income of $61k.
However if you have another investment property there may be deductions that could come off your taxable income.
Go seek some professional advice.
Hi Rob,
Unfortunately you will have to pay CGT (at the 50% rate) regardless of your yearly income or the fact that you have debts tied up in other property. However, if you owed money on the unit, interest paid also needs to be deducted to reduce the CGT bill.
Yack’s calculations are basically correct: 110-40 (Sale price – cost base) = 70, halved will be 35 that will take your income for the year to $61K. I took the liberty of using the figures you have provided and entered them into the calculator below:
http://www.cch.com.au/cgi-bin/cgt00isapi.dll/ and found that your CGT bill will be approx $27,955 (gross estimate).
NOTE: The above figure does not take into consideration deductions which may be added to further reduce the CGT i.e. RE agent’s commission, advertising costs (for sale) and any other expenses incurred when you first purchased unit (i.e. stamp duty, legal fees) or expenses during ownership such as capital improvements made, and of course any tax which you paid through your salary earnings (PAYE).
Have a look at the calculator, it’s a good quick overview of what you could expect to pay, but remember it should only be used as a GUIDE. As Yack suggested SEE PROFESSONIAL ADVICE from your accountant or tax agent.
Cheers,
Jo
robert, if you signed the contract to sell in this financial year, you have now got a whole year to make plans to minimise your taxable income.
One way of doing this is to prepay your interest in June of next year (for your other IP), thus basically doubling your interest payments which are a deduction.
If you signed the contract last FY, there is nothing you can do to avoid the tax now. Best speak to an accountant in either case – they are best placed to offers suggestions as they should then have your full situation..
Cheers
Mel
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