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Hi everyone
I just found this site and I think it’s great. Me & my husband have two investment properties but still new in the game. Some of the stuff that I read here isn’t very clear but hopefully it will get better for me.
Anyway, my question is:
One of our properties that we use to live in is rented out at the moment. If we decide to sell it would we have to pay capital gain? I heard that if you lived in it you don’t have to pay.
What is the procentage of it anyway. Say if you make $30.000 how does it work?
Like I said, Iam very new to this…
Thanks
DanielaHi Daniela,
Congratulations and welcome to the community.
There are a couple of key points for you to consider when determining CGT liability.
Your home is exempt from CGT for the period that it remains your home and for a further 6 year (renewable) period provided you do not have more than one home at any one time apart from a 6 months period if you are trying to sell one property and living in another.
CGT is calculated by adding the gain (there is a 50% discount) if the property is owned for more than 12 months. This gain is added to your taxable income and levied under the same process that your income tax liability is determined.
Your CG basically determined by subtracting the purchase price + purchasing costs from the sale price less selling costs. Section 43 depreciation claims can also have an impact on your assessible gain.
I recommend a search of the ATO website at http://www.ato.gov.au and look for CGT. If you have difficulty locating it then do not hesitate to email me and I’ll return you a copy.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Daniela,
Derek summed CGT up beautifully, and if I may, I’d like to add that generally one of two formulae
are used to calculate the amount payable; these being indexed or discounted.I have included a link which may help, and by filling in the boxes, the CGT calculator will highlight costs associated with both methods, and recommends which would be the cheapest for you.
http://www.cch.com.au/cgi-bin/cgt00isapi.dll/
Remember, this calculator is only a GUIDE and consultation with your tax person (accountant or agent) is highly recommended/advised for a more accurate indication of what cost you will incur from sale proceeds.
Cheers,
Jo
Just one more point, you can only have one main residence at once time, so if you started living in your new property while renting out the old one and you claim the CGT exemption on that, then you new property may (probably) be liable for CGT if you ever sell it.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Wow!!!
You people are great! I didn’t expect such a great response. Thank you Derek, Jo an Terry.
Daniela
PS: I’ll be back.
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