CGT after selling an IP

[allsuccess]

I have simplified the numbers (e.g. haven’t added any capital costs, purchasing costs etc…) but my situation is this;

This has been an IP from day 1

Purchase Price 180K – January 2003, 50/50 between me/wife
Wife Transferred her 50 to me in December 2007 D)
During this transfer, house was valued (by an agent) @ 210K
So, CGT was calculated for my wife for her tax in 2008 as follows;
210K – 180K = 30K. Due to the fact that holding the prop for more than 12 months, 50% rebate;
15K, and only 50% ownership, 7.5K was the CGT amount for my wife.

During my tax return, 50% ownership period and 100% ownership period was handle separately and all was good.

I’ve sold the property in 2012 for 305K. Even though I use an accountant, I’d like to have an idea as well on how the CGT is calculated. I tried to look in this forum as well as ATO but couldn’t find a similar scenario.
Here’s how I’ve done it;
My cost base, 50% of 180K + 50% of 210K => 195K
CGT = 305K-195K => 110K
Since I had the property for more than 12 months, I get 50% rebate, so CGT is 55K.
Is this correct?

 

[Terry_w]

Think of it as 2 separate CGT assets.

1. Your 50% of the house.
You acquired for $90,000 (your 50%). Sell for $152,500 (your 50%) = a gain of $62500.
50% discount applied = gain of $31,250

2. Your other 50% purchased from wife
purchase price is 50% of $210,00 = $110,000
Sell for $152,500 ( 50% total sale price) = gain of $42,500
50% discount = $21,250

So your taxable gain would be around $31,250 + $21,250 = $62,500

max tax payable around $30k.

Of course this is not taking into account the many costs you could claim such as stamp duty, rates, agent fees etc.

 

[allsuccess]

Think of it as 2 separate CGT assets.

1. Your 50% of the house.
You acquired for $90,000 (your 50%). Sell for $152,500 (your 50%) = a gain of $62500.
50% discount applied = gain of $31,250

2. Your other 50% purchased from wife
purchase price is 50% of $210,00 = $110,000
Sell for $152,500 ( 50% total sale price) = gain of $42,500
50% discount = $21,250

So your taxable gain would be around $31,250 + $21,250 = $62,500

max tax payable around $30k.

Of course this is not taking into account the many costs you could claim such as stamp duty, rates, agent fees etc.

Thanks Terry, greatly appreciate your advice.

 

[Paul@PFI]

Missing CGT Cost

You should also add the stamp duty (if any) and the legal costs in acquiring the other 50% in 2007.

Paul

 

[allsuccess]

You should also add the stamp duty (if any) and the legal costs in acquiring the other 50% in 2007.

Paul

Yes, thanks Paul.

 

[SYD]

Think of it as 2 separate CGT assets.

1. Your 50% of the house.
You acquired for $90,000 (your 50%). Sell for $152,500 (your 50%) = a gain of $62500.
50% discount applied = gain of $31,250

2. Your other 50% purchased from wife
purchase price is 50% of $210,00 = $110,000
Sell for $152,500 ( 50% total sale price) = gain of $42,500
50% discount = $21,250

So your taxable gain would be around $31,250 + $21,250 = $62,500

max tax payable around $30k.

Of course this is not taking into account the many costs you could claim such as stamp duty, rates, agent fees etc.

Just a correction to point 2 of the calculations:
50% of $210,000 is $105,000.
Gain becomes $47,500 and with 50% discount becomes $23,750.
Total taxable gain becomes $55,000.

This is taxed at your marginal tax rate plus Medicare levy.

I agree with other comments about adding in stamp duty, legal costs, agents fees in the calculation.

SYD

 

[allsuccess]

Just a correction to point 2 of the calculations:
50% of $210,000 is $105,000.
Gain becomes $47,500 and with 50% discount becomes $23,750.
Total taxable gain becomes $55,000.

This is taxed at your marginal tax rate plus Medicare levy.

I agree with other comments about adding in stamp duty, legal costs, agents fees in the calculation.

SYD

Thanks. I've done the calculations with accurate figures (e.g. purchase costs, etc...) based on the principle of 50/50 split (2 separate CGT assets). I'll be taking that to my accountant.

 

[Terry_w]

Just a correction to point 2 of the calculations:
50% of $210,000 is $105,000.
Gain becomes $47,500 and with 50% discount becomes $23,750.
Total taxable gain becomes $55,000.

This is taxed at your marginal tax rate plus Medicare levy.

I agree with other comments about adding in stamp duty, legal costs, agents fees in the calculation.

SYD

Thanks Syd. I can add but not cannot subtract.