How to calculate capital gains tax

How to calculate capital gains tax

We get asked regularly how to calculate capital gains tax on the sale of a real estate property so we decided to give you an example so you can see how it works.Please note this calculation is applicable for individuals only (not a SMSF or company)

Very simple example:

Buy a property      1st March, 2007

COST 300 000
+ Stamp Duty 10 000
+ Legals 1 000
Total Cost $311,000

Sell a property     10th April, 2015

SALE 450 000
Less Commission 11 700
Less Legals 1 000
Total Sale Price $437 300

Capital Gain in simplest terms is:

Sale Price 437 300
Less Cost Price 311 000
126 300

Because owned property for greater than 1 year:

50% discount 63 150

Say owned by 2 people

31 575 31 575
P1 P2

$31 575 will be added to the individuals other income and taxed accordingly.

Therefore the higher the person’s ordinary yearly income the higher the capital gain will be taxed.

Please note the following:

  • No capital gain if it is principal place of residence for whole time people owned property can be pro rata-ed if part rented part principal place of residence.
  • No 50% Discount if property held for less than 1 year.  Time is contract date to contract date.
  • Other capital costs incurred during ownership period could increase cost based and therefore reduce capital gain. e.g.   Adding carport or pergola or renovations
  • If in only one person’s name 100% of capital gain to that person.

Please remember this is general advice only & you should seek professional advice for your own particular circumstances.

No Comments

Sorry, the comment form is closed at this time.