I am somewhat confused about calculations for capital gains tax. I understand the principles of Sale Price minus Cost of Purchase and assoc costs (legal, agent fees etc).
What I am having difficulty with is understanding the effect with holding cost (eg rates, insurance, interest, maintenance). I understand that I have been claiming these as tax deductions throughout the time I have been owning the property. However, I do not get a full refund of these costs and ultimately I have ended up out of pocket each year by $1000. For example
Taxable Income $40,000
Tax on this for 2011 would be $5550 however I had
Property losses of $1500 so my income was reduced to $38500 for income tax purposes.
Tax on this for 2011 was $5100.
Therefore I have received $450 back from the ATO for my out of pocket expenses on the property. I therefore had to pay $1050 out of my own pocket to maintain the property for the year.
Does this loss each year get factored in to the capital gains calculation or am I just not getting a concept correctly here. Thanks
What I am having difficulty with is understanding the effect with holding cost (eg rates, insurance, interest, maintenance). I understand that I have been claiming these as tax deductions throughout the time I have been owning the property. However, I do not get a full refund of these costs and ultimately I have ended up out of pocket each year by $1000. For example
Taxable Income $40,000
Tax on this for 2011 would be $5550 however I had
Property losses of $1500 so my income was reduced to $38500 for income tax purposes.
Tax on this for 2011 was $5100.
Therefore I have received $450 back from the ATO for my out of pocket expenses on the property. I therefore had to pay $1050 out of my own pocket to maintain the property for the year.
Does this loss each year get factored in to the capital gains calculation or am I just not getting a concept correctly here. Thanks