Hi, If you are currently not working or haven't been working and sell your IP. Do you still have to pay CGT?
Yep you would still have to pay CGT but it would be the best time to sell as your gain would be taxed at the lowest rate
The CG gets added to yoyr income. Assume you've had the property for more than 12 months. You calculate the capital gain.
Halve it then add that to your wage (nothing in your case). So if the capital gain was $100,000. You'd pay tax on $50,000.
As mentioned that is the best time to sell as it's not in addition to your wage.
If you are on centrelink payments
BE VERY CAREFULIf you sell in the same financial year as you got unemployment benefits !!
Your capital gain magically is deemed as income strange that a capital loss isn't treated the same way by centrelink
And then they will ask you to pay back payments they paid to you in the same financial year
.
And if you were negatively gearing the property centrelink again magically deems a net property loss as income.
And then they will ask you to pay back payments they paid to you .Thanks for the comments guys.
No centrelink payments were received.
So if I did not receive any income for the tax year, I will be taxed 0% on the $50K? – So no tax?
Or am I missing something….
If your gain after the 50% discount is $50K then you would be taxed the amount a person earning $50K would, which would be about $8550 – 15c in the dollar from $6K to $37K then 30c up to your $50K
The gain after discounts and other costs is just added to your other taxable income. If you had $0 taxable income then you may be able to earn $16,000 pa tax free, but after that you will be paying tax – but probably not as much as you normally might be if working.
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
Thanks guys. Makes alot more sense now.
For some reason I've always thought that any capital gains will be taxed at your current tax rate. So If you are currently taxed at 30% for your salary, then this capital gains will only be calculated at 30% and not added together with your salary and any other income you earn.
Sorry for the confusion and thanks for clearing that up
If you have some pre existing capital loss carried forward from other years you could reduce the taxable amount.
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