Capital Gains Tax (again)

Hi,
Quick question (couldn't find after searching the site).
If I buy a block for $100,000, build a house on it costing $500,000 and sell it after 2 years for $700,000 how much capital gains tax do I pay?
Is the capital gain $100,000? And if I had the place repainted after a year costing $20,000, would the capital gain now just be $80,000?
So would my tax bill be 50% of my income tax rate on $80,000?
Cheers in advance
 
If your original intention was to buy a block of land and build a house and sell it sounds like a profit from an isolated transaction and cgt wouldnt apply. It would be on revenue account. Wrong starting point.
 
Basically your calculations are correct - i.e. (assuming CGT applies as per Mike's comment) you add 50% of the capital gain (i.e. 50% of $80K) to any other taxable income you have in the year that you sign the contract to sell and calculate tax on the total amount.

But does sound a bit strange that the property would need repainting in just two years.

If it was rented and repainting relates to rental income then repainting may be a straight deduction from rental income.

Probably need a bit more info to understand the situation.

GST could also be an issue because the sale relates to "new" residential property.
 
Sorry, the scenario did not look realistic because I made it up to understand the basics. My actual scenario is as follows.
I have a couple of rental properties.
I struggle to keep track of all the money I spend on them.
What I do spend on them for maintenance or repairs I claim in the year that they were incurred as a deduction.
Sometimes if I am fixing something I spend a lot more to improve it (eg. renovate and expand a sunroom) because I feel like making it nicer for the tenant and because I think it will improve resale. I accept that because it is an improvement I can't claim it against income that year. I understand that I could get some of the money back by depreciating the improvements (over time).
But what if I am forced to sell in the short term? Lets say the property is worth $500,000 when I buy it and I spend $50,000 on improvements, and then sell it for $550,000 (quite realistic in this case). I haven't really made any capital gain, will I have to pay CGT?
Cheers.
 
You will have a capital event. On those facts provided you wouldnt make a capital gain or capital loss. So no cgt to pay as you havent made a capital gain.
 
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