My own capital gains tax question, pls clarify

[melbkid]

Ok, I've read about CGT numerous times but I was hoping someone could explain our situation clearly

1. Property A ( I'm not sure if this is needed to be noted but more info the better)
Have had this investment property for the last 8 years which Is currently positive geared

2. Property B
3 years ago my now wife and I bought a house which we were planning to move into at a time when we were comfortable to pay for a renovation and then take on the payments ourselves without renting it out
We settled on the property and rented the property out for 6 months through an agent, we then extended another 3 months and then moved into the property.
For that first tax return we declaed the rental income and obviously the expenses that went with the property as if it was a investment property,

We now own property B for 3 years and want to sell, however I'm now concerned about any Capital Gain implications due to that 9 months of renting out the property,
With the renovation we completed and the growing market we will made a tidy profit out of the house

Things to note:

It was after the renters moved out and when we took back the keys after 9 months that we did renovations. I didn't claim any of the renovation costs at all,

While we were renting out the house , we were living at our parents.

The things we claimed as expenses for the house in those 9 months were : property management fees , rates, stamp duty, interest on loan, that was done in our first tax return ( we have had 3 returns since ownership)

Our last 2 tax returns obviously nothing has been claimed and it's been our PPOR

Hope someone could please help,

Thanks

 

[Terry_w]

rented 9 months our of 36 = 9/36 subject to CGT.
You can claim any expenses you have not otherwise claimed
50% CGT discount.

 

[melbkid]

Sorry if this sounds silly but....

Let's say I purchased for 500k and I sold for 700k

Does that mean 200k divide by 36 x 9 = 50k less 50% meaning I would have to pay 25k straight out or is it a % of the 25k depending on what tax bracket we fall under?

It seems I would have been better at the time just leaving it vacant for the 9 months??

Thanks for your help thus far

 

[jrc]

Have you factored in your renovation costs? These form part of your cost base.

Your issue would be the same if the house had been vacant for the first 9 months.

 

[melbkid]

No, no renovation costs at all,
My concerns are evidence, costs with invoices and receipts etc, a lot of the renovations were done ourselves,

 

[The Fence]

I'd like to see a qualified answer to this also.

 

[Paul@PFI]

Terry is qualified and his answer was correct.

Note that the cost base that is used for calc of the overall cap gain will be adjusted for some costs that you incurred in owning the property. eg : rates, interest etc for the period of ownership that you haven't claimed as deductions.. (incl your reno's you didn't claim deductions for) ...These may increase the cost base and thus reduce the total cap gain so that when you calc 25% of the total gain it is less...Then split half each then half of that taxable.

This should assist to demonstrate that its easy to over estimate cap gains and pay too much tax. Worth getting personal tax advice.