CGT calculation

[ket]

cgt calc

Thanks Geoff......purchase price includes costs as I borrowed the lot!

I think I will go ahead with the sale as WA is going well at the moment (easy to sell at a good price) and we need the money. I still intend using some of it to buy another place, but with positive cashflow this time! Its just hard starting all over again, but at least this time I have a much better idea of what I am doing and may even look into using a trust as I don't intend stopping at one property.
Thanks for all the help and comments.

 

[Bricks & Mortar]

low

Thanks everyone, all is now as clear as mud!
Basically I am looking at a method of working out a rough number which will show what we will be left with after RE agents, accountants, ATO, etc have taken their cut. I am hoping to have enough to get us out of the hole we are currently in but also to have enough to buy another IP that is +cashflow rather than negatively geared!
House is 70s vintage, we paid $142K all up (inc purchase costs) in 2002. Going by the INternet prices, it should pay between $240K and $270K. We have claimed depreciation each year, and although when purchased we were on the high tax bracket, we are now on low (very low)!
Ket

Ket, you say that the tax bracket your currently on is low (very low)
That's the best time to pay the cgt,
If you run the figures whilst on a high bracket, you'd be paying more!
Hope you do well especially given the present WA market

cheers Timm

 

[MJK]

1. It's only depreciation claimed on the building that has an impact on CGT calculations. Depreciation claimed on the Assets (Fixtures and Fittings) doesn't come into it. And in many cases, there is more depreciation claimed on the Assets than the building.

2. Any property bought after May 13, 1997, when sold must have the eligible building depreciation deducted from the cost base whether it has been claimed or not. Yep, you read it right. In other words, you might as well claim it.

The latter point is one of those obscure things the ATO could pull out of the hat if they wanted to get picky with you. I'd say many accountants don't know about it. I was alerted to it by a pretty savvy accountant. The NTAA (a training group for accountants) were telling their members about this either last year or the year before.

Scott

I thought I'd bump this thread up after reading the article in the August/latest API magazine on page 72 re Hidden Tax slug 1. They are suggesting that all depreciation reduces the cost base for CGT.

I can't believe the amount of conflicting advice on this! I would really love to hear peoples veiws on this article. Especially those in the know.

MJK

 

[coastymike]

For buildings acquired after 7.30pm ACT legal time on 13 May 1997, any deductions for capital works allowed under these rules reduce the cost base when calculating any capital gain or capital loss on disposal (s.110-45).

Where the building was acquired before that date, the amount which can be claimed for building allowance will not form part of the second or third element of the cost base (s.110-40 and ID 2004/404).

Deductible expenditure incurred after 30 June 1999 on land or a building which was acquired at or before 7.30pm on 13 May 1997 does not form part of the fourth element (enhancement costs) of the cost base of the property. Where a capital loss is made on the property, the reduced cost base does not include amounts for which a deduction can be claimed (without reference to the date of acquisition of the property).

It should be noted that there is no fixed time for determining when amounts can be 'deducted' for the purposes of adjusting the CGT cost base: for example, the amendment period for claiming the deduction may have expired, so preventing the deduction being claimed (see TD 2005/47 in general). The cost base will then not have to be adjusted. It should also be noted, in regard to construction expenditure that where in relation to Division 43 (capital works) the taxpayer does not have sufficient information to determine the amount and nature of the expenditure and in addition does not seek to deduct the amount, the CGT cost base does not have to be adjusted (Practice Statement PSLA 2006/1 (GA)).

These are recent changes (Practice Statement came out on 15 February 2006) which does not require you to adjust the cost base if you haven't claimed the capital allowance along the way and you don't have sufficient information to determine the amount and nature of expenditure or the time limit has expired.

 

[MJK]

Coasty Mike,

Thankyou. My interpretation of the article was that they where discussing depreciation of fittings and fixtures affected the cost base, Your reply seems only to discuss Special building write off 2.5% or 4% and capital costs. Your opinion on fittings and fixtures would be greatly appreciated such as... specifically in my case...

the write off of carpets (replaced them)

the write off of a ducted A/C less ducting (replaced)

General division 40 depreciation from QS schedule (Diminishing)

How do these write offs and claims affect the cost base?

MJK

 

[MJK]

Coasty Mike,

Thankyou. My interpretation of the article was that they where discussing depreciation of fittings and fixtures affected the cost base, Your reply seems only to discuss Special building write off 2.5% or 4% and capital costs. Your opinion on fittings and fixtures would be greatly appreciated such as... specifically in my case...

the write off of carpets (replaced them)

the write off of a ducted A/C less ducting (replaced)

General division 40 depreciation from QS schedule (Diminishing)

How do these write offs and claims affect the cost base?

MJK

Coasty Mike, Depreciator etc... Where are u?

 

[Mry]

Coasty Mike, Depreciator etc... Where are u?

In the living hell otherwise known as tax season. My whole body aches from lack of sleep.

 

[DaleGG]

Amen, brother, Amen!!!

In the living hell otherwise known as tax season. My whole body aches from lack of sleep.

 

[coastymike]

Sleep...what is that ?