hey people,
im just wondering, is there an easy way to estimate my CGT when selling a property ? sorry for the newbie question
Yes , but be careful CGT and trading tax are 2 different things. if you made a profit on a property of say $90,000 and had to pay CGT you get a 50% disscount . So therefore you only pay tax on $45,000 at your normal tax rate. If you are taxed at the hightest rate you would have to pay 48.5 cents in the dollar . So there fore in this case it would be a total tax bill of $21,825 .
But if you develope a property and sell it straight away you dont get a 50% disscount , because you are concidered a trader of property , so in this case you would have to pay $43650 tax.
Does this make any sense to you? Im not the best at putting things into words.Cheers Rick
Monopoly, my favourite game
yep understood but how does the tax office determine who is a property trader and regular developer ?
i dont like paying tax so i would try and save that tax money
If you keep property for a certain amount of time before selling it usally a year is about the standard. How ever if it is your place were you live you dont have to pay tax as far as I know. But if you lived in a house divided it and built lets say another property on it then sold it you would be a trader of property. If you kept the property for say 1 year and rented it out then you would only have to pay CGT.
But it is a little grey area if you just keep fliping property every year you could be considered a trader.
Just like the stock market day traders pay normal tax rates , but people that buy and hope , once they sell only pay CGT.
Cheers RickMonopoly, my favourite game
So Rick if I understand correctly- if you want the CGT 50% discount on properties you have developed yourself you may have to keep them and rent them out for a while? ??12months??….sorry I am a bit slow when it comes to tax issues!![biggrin]
im a little slow too [blush2] but i think that sounds about right
of second importance is GST. if you build and sell you need to register and lose a further 10% of your profits. it pays not to be a developer!
http://www.megainvestments.com.auJohn Carroll
Ausprop,
I take it thats if your considered to be in thebusiness of doing it regularly (i.e a Trader)? Not for 1 or 2?
REDWING
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