Forums / Getting Technical / Legal & Accounting / Capital Gains/Loss Calculation?

Viewing 7 posts - 1 through 7 (of 7 total)
  • Profile photo of ijcijc
    Participant
    @ijc
    Join Date: 2002
    Post Count: 28

    Hello- Could somebody share with me the formula for calculating capital gains tax. A ‘real life’ example would be great as it will help me better understand the inputs, especially if their is financial jargon involved . It looks like I may have to sell my investment property at a loss, so wondering if I can carry a loss forward indefinitely, and deduct from any future capital gains on another investment property when sold? Thanks

    Profile photo of tanner892tanner892
    Participant
    @tanner892
    Join Date: 2013
    Post Count: 25

    Yes that’s exactly what you can do, so for example; if you buy a house for for $300k and sell for $200k you will have a carry forward capital loss of $100k. Now in the future if you buy another house for let’s say $400k and sell it later on for $600k (and owned it for over 12 months) You would have a Net Capital Gain of $50k (600k – 400k – 100k <-CFL x 50%).

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,173

    e.g. Buy for $300,000
    Sell for $300,000

    Cost base is $300,000 plus all costs not claimed such as stamp duty, lawyer fees, estate agent commission etc.

    This could be say $40,000 So you would suffer a capital loss of $40k in this example. This cannot offset income but can offset future capital gains.

    Losses are applied before the 50% discount too

    So $40k carried forward as a loss.

    You then make $80,000 in capital gains for shares held more than 12 months

    The loss is applied first so the gain will be $40k then the 50% discount making the gain $20k and this is added to your other income.

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of Solomon10Solomon10
    Participant
    @solomon10
    Join Date: 2010
    Post Count: 134

    For what time period can a loss be carried forward? Is there a limit of financial years?

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,173

    Generally until death, but only in the final tax return. If your estate sells a property the loss won’t offset the gain.

    There are also various rules about carrying forward losses, especially in trusts.

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of ijcijc
    Participant
    @ijc
    Join Date: 2002
    Post Count: 28

    Thnx all for your contributions. Terryw could you please elaborate on:”Cost base is $300,000 plus all costs not claimed such as stamp duty, lawyer fees, estate agent commission etc.” I would like to know exactly what costs I can claim in the cost base so I can do a calculation. Are any of the selling costs like REAgent’s fees included?

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,173

    Thnx all for your contributions. Terryw could you please elaborate on:”Cost base is $300,000 plus all costs not claimed such as stamp duty, lawyer fees, estate agent commission etc.” I would like to know exactly what costs I can claim in the cost base so I can do a calculation. Are any of the selling costs like REAgent’s fees included?

    <i class=”rw-ui-like-icon”></i>0<i class=”rw-ui-dislike-icon”></i>0

    <i style=”border-right-color: rgba(153, 153, 153, 0.5);” class=”rw-ui-info-nub rw-ui-info-outer-nub”></i><i style=”border-right-color: rgb(255, 255, 255);” class=”rw-ui-info-nub rw-ui-info-inner-nub”></i>Rate this

    Easier to look directly at the relevant law:
    http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s110.25.html

    This lists out the things you can claim.

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

Viewing 7 posts - 1 through 7 (of 7 total)

You must be logged in to reply to this topic.