depreciation/ inflation help

[jpr777]

hi al,l new to the forum and i would like to say that this forum is excellent.

when selling an i.p that has a c.g.t, you get taxed on your income rate on 50% of your capital gains.
so if your on a lower tax bracket the tax saving is greater. ok i think thats right?

Q. do you have to be on that lower tax bracket within that financial year to gain a better c.g tax benifit or does it have to be over a number of years leading up to the sale?

not sure how to word this next question, but here goes.
Q. what about inflation with depreciation on a i.p? is todays dollar worth less than itself in ten years? if so, if i claimed a total of $10,000 depreciation over 10 years and after that ten yrs sold and claimed a c.g. would i have to pay back that $10,000 back?
if so with inflation on the dollar what would that $10,000 dollar value actually be after that 10 yrs.

im so confused
help please

 

[Propertunity]

when selling an i.p that has a c.g.t, you get taxed on your income rate on 50% of your capital gains.
so if your on a lower tax bracket the tax saving is greater. ok i think thats right?

Yes, but remember that the capital gain (CG) gets added to your income and so may push you into a higher tax bracket.

Q. do you have to be on that lower tax bracket within that financial year to gain a better c.g tax benifit or does it have to be over a number of years leading up to the sale?

It applies in the Financial Year that you exchanged contracts (sold) the IP.

Q. what about inflation with depreciation on a i.p? is todays dollar worth less than itself in ten years?

Yes

....if so, if i claimed a total of $10,000 depreciation over 10 years and after that ten yrs sold and claimed a c.g. would i have to pay back that $10,000 back?

No

 

[jpr777]

cheers thankyou

 

[Rob G.]

hi al,l new to the forum and i would like to say that this forum is excellent.

when selling an i.p that has a c.g.t, you get taxed on your income rate on 50% of your capital gains.
so if your on a lower tax bracket the tax saving is greater. ok i think thats right?

Tax saving is greater if on a higher marginal rate

Q. do you have to be on that lower tax bracket within that financial year to gain a better c.g tax benifit or does it have to be over a number of years leading up to the sale?

No longer any income averaging provisions for CGT

not sure how to word this next question, but here goes.
Q. what about inflation with depreciation on a i.p? is todays dollar worth less than itself in ten years?

A dollar today is worth more than a dollar in the future

if so, if i claimed a total of $10,000 depreciation over 10 years and after that ten yrs sold and claimed a c.g. would i have to pay back that $10,000 back?

Indirectly ... yes for building depreciation (Division 43 capital works), this comes off the cost base for your property

if so with inflation on the dollar what would that $10,000 dollar value actually be after that 10 yrs.

Depends on the inflation, or discount rate for opportunity cost and also your marginal tax rate both now and when you realise your capital gain.

im so confused
help please

Cheers,

Rob