Hello to everyone,
Question on behalf of a friend that I cant answer:
-1 x residential block of land purchased in outer eastern suburbs of Melbourne in May 2009 for $190,000.
-Stamp duty around $8,000. Financed by bank loan and own money.
-Now on the market (Jan 2010) for $220,000.
-Assuming the land sells on or about that price – 1. Next week and 2. After the expiration of a full 12 months (May 2010)
Is CGT and what if any other charges are levied?Thankyou in anticipation,
Noel
You will be up for CGT if the land sells for more than the purchase cost (incl stamp duty/purchaselegals etc). A concessional rate may apply if the period of 'ownership' exceeds 12 months (between dates of signing contracts of sale).
Your friend will also be able to include the holding costs, such as interest, rates etc in the cost base.
(Based on the assumption that they haven't been claimed previously, as the property is a block of land.)
For holding it more that 12 months the discount CGT metod will apply. You will have to pay tax on 50% of any profit, that will then in turn be taxed at your rates for the year.
please ask if you need more info….
Ppiersw
The holding date is not the important date for CGT calculation it is the respective Contract dates which are taken into consideration.
Richard Taylor | Australia's leading private lender
$30,000 profit less purchase costs and selling costs, and maybe holding costs, then divide this by 2 if over 12months.
This will be the taxable gain which is added to your other income.
The amount of tax payable wouldn't be very much at all.
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
Kind regards for the answers
Cheers
Noel
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