Calculating Capital Gains Tax for buying & selling within 3 months?

[BigCol]

Hello,

Looking at whether it's worthwhile buying under market, renovating, then selling within 3 months of purchase & wondering how much profit will be left after I have to pay CGT.

Example:

Cost of Purchasing:
Purchase price: $125,000
Stamp duty: $3,056
Renovation: $15,000
Council Rates (pro-rata): $500
Body Corporate fees (pro-rata): $500
Legal Purchasing fees: $800
Building & Pest Inspection fee: $418
Sub-total: $145,274

Cost of Selling:
Advertising costs: $1,500
Legal fees: $500
Sub-total: $2,000

Sale Price: $180,000
Current taxable income: $120,000

Therefore is this correct?

Sale Price less selling cost = $180,000 less $2,000 = $178,000

Hence, $178,000 less cost of purchasing @ $145,274 = $32,726.

Hence: Capital Gain = $32,726 (no 50% exemption as selling within 12 months)

$32,726 PLUS taxable income @ $120,000 = $152,726 & I get taxed on total amount:

So basically it would be 37c over $80,000, or $32,726 x 37% = $12,108 tax to pay

Is this correct, or have I just lost the plot??

Factoring all of this in; total purchasing costs + selling costs + tax to pay = $160,000, so at $180,000, I'd clear $20,000 profit...hmmm...worthwhile? I guess if I did 4 a year = $80,000 extra...maybe...

 

[Propertunity]

Hi,

I did not read all your numbers, so it does not do my head in at this time of day

However, if you are buying and selling in a short time frame, then you probably do not need to pay CGT at all. The houses you buy at $x will have reno $y spent on them and they'll be sold for $x+$y+$profit. In this scenario they would be considered trading stock and you'd only pay tax on your $profit after expenses.

The reason, that the $profit is so low, is the high transaction costs to get into and then out of the investment.

 

[Ed Barton]

Hello,

Looking at whether it's worthwhile buying under market, renovating, then selling within 3 months of purchase & wondering how much profit will be left after I have to pay CGT.

Example:

Cost of Purchasing:
Purchase price: $125,000
Stamp duty: $3,056
Renovation: $15,000
Council Rates (pro-rata): $500
Body Corporate fees (pro-rata): $500
Legal Purchasing fees: $800
Building & Pest Inspection fee: $418
Sub-total: $145,274

Cost of Selling:
Advertising costs: $1,500
Legal fees: $500
Sub-total: $2,000

Sale Price: $180,000
Current taxable income: $120,000

Therefore is this correct?

Sale Price less selling cost = $180,000 less $2,000 = $178,000

Hence, $178,000 less cost of purchasing @ $145,274 = $32,726.

Hence: Capital Gain = $32,726 (no 50% exemption as selling within 12 months)

$32,726 PLUS taxable income @ $120,000 = $152,726 & I get taxed on total amount:

So basically it would be 37c over $80,000, or $32,726 x 37% = $12,108 tax to pay

Is this correct, or have I just lost the plot??

Factoring all of this in; total purchasing costs + selling costs + tax to pay = $160,000, so at $180,000, I'd clear $20,000 profit...hmmm...worthwhile? I guess if I did 4 a year = $80,000 extra...maybe...

looks about right but you've left off the tip (medicare levy).

why not hold it for a year?

 

[Qlds007]

Dont forget you dont have to hold it for 1 year merely have the purchase contract and the sale contract > 365 days apart.

We often buy on extended settlement and then onsell after a 1 year.

 

[Qlds007]

Duplicated reply

 

[Ausprop]

sounds like you are engaged in an enterprise and should consider if you need to pay GST on your sale proceeds

 

[adrianjt]

just settled... then large offer made

hello

hoping for some direction please

bought new family home, settled last month, old family home now on market as we have moved into new family home, old home going to auction in a few weeks

substantial offer (up 20%) made via agent on new family home


if offer accepted will we have cgt liability?

if so any reasonable way around liability?

thanks in advance