Capital Gains Tax
- Thread starter BillC
- Start date
Thanks for the replies
I have very little income say 15k/annum as I am retired
Thats the reason I want to sell.Have other ips and living of equity which is becoming more difficult
I bought the townhouse new and have claimed maximum depreciation
So do I have to add all the cumilitive depreciation over the 6 years
and add it to the capital gain
I do have Capital gain losses to offset the Capital Gain
I guess I could see the accountant but thought it would be a good topic on this forum and also help me in my decision
I have very little income say 15k/annum as I am retired
Thats the reason I want to sell.Have other ips and living of equity which is becoming more difficult
I bought the townhouse new and have claimed maximum depreciation
So do I have to add all the cumilitive depreciation over the 6 years
and add it to the capital gain
I do have Capital gain losses to offset the Capital Gain
I guess I could see the accountant but thought it would be a good topic on this forum and also help me in my decision
BillC ...I am also interested in what replies you get as I'm in similar posy.
I think the CG calc. sort of works like this ....
1) The CG is "what you sold it for" less "what you paid for it ( cost basis)".
2) Then that "cost basis" is reduced (therefore CG increased) by the cumulatative 2.5% build. dep. you have claimed. But NOT the fittings dep.
3) Then you can claim "all other costs of ownership/sale" that you haven't previously claimed.
4) Then you get a 50% discount if you owned in your own name or trust ( as you've owned the IP more than 12 mths.)
5) Then you deduct any Capital Losses that you've accumulated from the current f/y or previous f/y's. ( Must be all in same name.)
6) Then you add that amount to your other taxable income ($15k) for the year and work out the income tax.
Also then .... depending on your age, and your employment status, if you have a SMSF you can possibly reduce the CGT further by making a contribution to your SMSF.
Now I'm just an "L" plater so don't hang me here...if I've got any of the above points wrong then please accept apology. Happy
to be corrected by our more learned friends on this matter.
LL
PS It seems to me the term Capital Gains Tax is a mis-nomer, it's just all Income Tax at Income Tax rates when you get right down to it.
I think the CG calc. sort of works like this ....
1) The CG is "what you sold it for" less "what you paid for it ( cost basis)".
2) Then that "cost basis" is reduced (therefore CG increased) by the cumulatative 2.5% build. dep. you have claimed. But NOT the fittings dep.
3) Then you can claim "all other costs of ownership/sale" that you haven't previously claimed.
4) Then you get a 50% discount if you owned in your own name or trust ( as you've owned the IP more than 12 mths.)
5) Then you deduct any Capital Losses that you've accumulated from the current f/y or previous f/y's. ( Must be all in same name.)
6) Then you add that amount to your other taxable income ($15k) for the year and work out the income tax.
Also then .... depending on your age, and your employment status, if you have a SMSF you can possibly reduce the CGT further by making a contribution to your SMSF.
Now I'm just an "L" plater so don't hang me here...if I've got any of the above points wrong then please accept apology. Happy
to be corrected by our more learned friends on this matter. LL
PS It seems to me the term Capital Gains Tax is a mis-nomer, it's just all Income Tax at Income Tax rates when you get right down to it.
Thanks Landlubber
That gives me something to work on for approx Capital Gains I would have to pay
Before I put the property on the market I will see my accountant
When I retired I thought that I could hang on to all my ip properties for the long term
I have all the LOCs etc but increase in debt at my age worries me and I have to sleep well at night
Sure you look at the capital growth and in the last year LOE worked
But I dont think this will keep happening
I think it might be better to slowly sell my property portfolio and live of the
interest and just enjoy our retirement instead of worrying about interest rates, tenants,repairs, land tax etc
That gives me something to work on for approx Capital Gains I would have to pay
Before I put the property on the market I will see my accountant
When I retired I thought that I could hang on to all my ip properties for the long term
I have all the LOCs etc but increase in debt at my age worries me and I have to sleep well at night
Sure you look at the capital growth and in the last year LOE worked
But I dont think this will keep happening
I think it might be better to slowly sell my property portfolio and live of the
interest and just enjoy our retirement instead of worrying about interest rates, tenants,repairs, land tax etc
BillC,
Forgot to also remind you that if you have enough credit available in your LOC's to pre-pay the interest on your loans (or part loans) ... that is also an effective way to reduce your income and use those extra "losses" to "wipe out" Capital Gains in this f/y. You need to get the calcs and the timing of all this just right !! Also keep in mind you reduce your interest costs for next f/y. Also the date you sign the contract is "the date" for the IP sale.
Hope I've explained that correctly !!
Also, don't forget to ask your lender what loan payout they will want when you sell a certain IP. You should know this for all your IPs so that you can work out which one is the best to sell. By my numbers, IF an IP is highly geared (high LVR) AND also has subtantial CG, you could end up with very little cash leftover by the time you've paid out the the bank and paid the ATO their tax .... good advice is a necessity !! Hope your accountant is up to it !!
LL
Forgot to also remind you that if you have enough credit available in your LOC's to pre-pay the interest on your loans (or part loans) ... that is also an effective way to reduce your income and use those extra "losses" to "wipe out" Capital Gains in this f/y. You need to get the calcs and the timing of all this just right !! Also keep in mind you reduce your interest costs for next f/y. Also the date you sign the contract is "the date" for the IP sale.
Hope I've explained that correctly !!
Also, don't forget to ask your lender what loan payout they will want when you sell a certain IP. You should know this for all your IPs so that you can work out which one is the best to sell. By my numbers, IF an IP is highly geared (high LVR) AND also has subtantial CG, you could end up with very little cash leftover by the time you've paid out the the bank and paid the ATO their tax .... good advice is a necessity !! Hope your accountant is up to it !!
LL
Bill,
Sounds like you've got it under control !! I'm also "sitting" on my SMSF until 60 . Tax free !! ...now that's my kinda price !! Four years to go. Not that we're in any hurry mind .......
LL
Sounds like you've got it under control !! I'm also "sitting" on my SMSF until 60 . Tax free !! ...now that's my kinda price !! Four years to go. Not that we're in any hurry mind .......
LL
Don't forget the timing of the sale. It might be better to sell after July 1st (next financial year) so the CGT gets added to your income next year rather than this one; depends if you will on a similar income next year though (plus the tax rates are slightly reduced next year). Also is the property in your name only? Some things to consider...
Hi Gang
i have collected various calculators i use, and i like this capital gains calc, and have used occasionly
http://www.yourmortgage.com.au/calculators/capital_gains_tax/
hope it helps out even if roughly
cheers
i have collected various calculators i use, and i like this capital gains calc, and have used occasionly
http://www.yourmortgage.com.au/calculators/capital_gains_tax/
hope it helps out even if roughly
cheers
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