Tax on sale of IP
- Thread starter fATICAN
- Start date
Depends if the IP was bought in individual name or trust or other structure.
In personal name, if held above 12 months 50% reduction in capital gains added to your income.
In trust similar, but trusts can offset losses against gains...
I am not sure but best would be to speak to a good accountant.
Whatever you do with the money after is irrelevant as long as you met your tax obligations!
This is referred to as capital gains tax. It can be minimised by choosing when to sell, or by choosing who the owner was.
Remember that any money spent on capital improvements will add to your capital base and hence reduce the profit so get all those receipts out and ready.
If you inherited it, that value would the cost base. So, unless I'm having a little "senior moment" you wouldn't have to add anything to your income if it has lost value, or am I missing something? You would carry forward the loss and could offset it against a gain in the future.
Do make sure you check with your accountant though before making any moves. I could be wrong.
"senior moment"
Cost base could be the cost base of the deceased, not the value at the time of the death.
tax on IP sale
Thanks...we had agent appraisal at the time $245k...then pro valued 2013..$195k
Now..somewhat less than 200k....if sell for eg.200k..I get 100k...not counting costs..
Then the 100k goes on top of my taxable income..eg 100k+ 100k..= 200k taxable income..
Correct?..not sure...but if it is..omg....
should we wait till we both retire?..are there different rules after 65?
Cheers
Mike
Thanks...we had agent appraisal at the time $245k...then pro valued 2013..$195k
Now..somewhat less than 200k....if sell for eg.200k..I get 100k...not counting costs..
Then the 100k goes on top of my taxable income..eg 100k+ 100k..= 200k taxable income..
Correct?..not sure...but if it is..omg....
should we wait till we both retire?..are there different rules after 65?
Cheers
Mike
Doh! Of course. I should know that because we are about to sell an inherited house and the cost base is very low (from 1986(?) - about a week after CGT was introduced anyway - what a bummer!)
I'm thinking of another house that had the cost base reset when it moved from my mother's name into the trust and not via the will. At that time, there was stamp duty to pay, plus capital gains tax, but the cost base was set at the value at that time.
Proves nobody should take advice from a stranger on the net...
Thanks Terry. I clearly need a little lie down. Must be the paint fumes
.Mike, you are way over estimating the gain here. The gain will basically be sale price less cost base (which may be what it was purchased for plus associated costs). Then you may also have the 50% discount.
There may be no tax payable at all.
Lots of issues affect the tax outcome. There are five different elements that can affect cost base and ultimately the final profit. The inherited issue too affects cost base in different ways . Every clients affairs are different. Costs not claimed as deductions. improvements, depreciation and cap allowances calaimed "may" affect cost base too.
Personal tax advice is a MUST. Overpaying tax and underpaying tax are both as bad as each other.
Super contributions, selling loss making CGT assets like shares etc are all ways to reduce the impact for some taxpayers. The start point is the date of the sale and timing for when it hits "income". Get that wrong and its a problem. I would always start with a plan and identify the likely tax then address strategies that may assist to reduce it.
If your Pop bought it prior to 20/9/1985, then your cost base will be market value at date of death.
No simple answer
I assume property is more than 2 Hectares? Only 2 hectares may be exempt under main residence exemption.
Will you live in it first? Will it be established as main residence?
Pre or post CGT property?
Cost base would be value at the date of death. No main residence exemption for you as never your main residence. if you sell now likely to be a Cap loss.
