Hi guys
If I were to make profit in a property deal (i.e. a buy&sell within 1 year) how much do I get to keep and how much do the government make from it (CGT)?
Does it depend on my investment costs, salary etc?
And when does the tax come into effect. This is, is it realise when you lodge a tax return as a lump sum to pay?
For example, 50K profit, 50K salary, 30K spent on purchase costs, renovations etc…Thanks in advance.
Note: last post I made I had 80+ people read it and not one reply. Wish me luck this time!
Hi, my first time on the forum, but hope this helps.
CGT is payable at your full marginal rate if property or other assets sold for profit within 12 months. It is 50% of that if sold after 12 months – a significant saving!
To calculate your CGT, you deduct from your sale price the actual cost of the property, legal and stamp duty and any other costs associated with its purchase and sale plus any capital costs from the renovation. What’s left is your CG which will be subject to tax at either the full CGT rate (if sold within 12 months) or CGT rate less 50% if sold after 12 months.
Salary is only relevent as a determinate of your marginal tax rate.
Hope this is relatively clear. Good luck!Peter Taylor
Thanks Peter. This information is great.
When you say less 50% are you referring to 50% or the amount or %50 of the rate applied?
Also, has anyone have any ideas on how this CGT would apply in the case of a subdivision if only half of the land was sold within a tax year?
When is it realsied? Tax return time?Hi Gabbo,
Recommend you go to the ATO website and download a copy of the CGT Guide. It is very comprehensive and covers most issues surrounding CGT.
http://www.ato.gov.au/individuals/content.asp?doc=/content/43486.htm
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping.
Hello Gabbo,
If you have the property over 12 months you could use this example.
Bought 2002 for $125000 stamp duty $6000 capital improvements $10000 legal fees $1000.Sold 2004 for $225000, agents fees $9000 solicitor cost $800.
Therefore first add all costs together which adds up to $26800.Add this onto the $125000 and this adds up to $151800. Sell price $225000-$151800 equals $73200 profit. Now halve this $36600 and this is what you will be taxed at depending on you marginal rate.[biggrin]MartinMartin
You must be logged in to reply to this topic. If you don't have an account, you can register here.
