Another CGT Topic

Discussion in 'Accounting & Tax' started by Nem, 13th May, 2019.

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  1. Nem

    Nem Well-Known Member

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    Could you please help me confirm if I'm understanding this properly.

    Purchase price in 2000 $500k
    Valuation when became IP $1,000,000 in 2010
    Claimed another 5 years of PPOR, valuation $1,200,000 in 2015
    Sold $1,400 in 2020

    1a
    10+5 years PPOR
    5 years rented
    Profit $1,400,000-$1,200,000 = $200,000
    200,000 * 50% = 100,000 Tax payable on $100k

    1b
    10+5 years PPOR
    5 years rented
    Profit $1,400,000-$500,000 = $900,000
    900,000 * 50% = 450,000*25% Tax payable on $112.5k

    2.
    Run Sole Trader business from home and claimed 20% of holding costs in 2009 only for 12 months

    How would I calculate CGT payable on that 20%?
    If I go with 1a, =100*20% divided with 1/20?

    Thank you!
     
  2. Terry_w

    Terry_w Mortgage broker licenced 4 tax/legal advice Business Member

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  3. Nem

    Nem Well-Known Member

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    Thanks Terry, yes I actually followed your notes :) Just unsure how would I add sole trader part to that calculations? Can there be two calculations?
     
  4. Mike A

    Mike A Well-Known Member

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    Sole trader working from home might change nothing if small business cgt concessions are applied.

    All the calcs are wrong.

    Why are you getting a valuation done in 2015 when you moved back in. First used to produce income rule doesnt work that way.

    Are you applying the main residence absence provisions ?
     
    Last edited: 14th May, 2019
  5. Nem

    Nem Well-Known Member

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    Didn't move in, done valuation as thats when PPOR became IP
    Why is all wrong??

    It was used for business only 1 year and 5 years for rental
     
  6. Mike A

    Mike A Well-Known Member

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    What happened between 2000 and the date it became an IP in 2010 ? Im assuming you lived in it.

    And then 5 years later after being an ip you move back in
     
  7. Nem

    Nem Well-Known Member

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    yes so 15 years PPOR
     
  8. Terry_w

    Terry_w Mortgage broker licenced 4 tax/legal advice Business Member

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    Yes the calcs are wrong.

    assuming small business concessions don\'t apply:
    You bought for $500k in 2000, and moved it
    in 2009 cost base was reset to market value $XX
    2010 you move out and use the 6 year rule
    2015 move back in - is it being used to produce income now?
     
  9. Nem

    Nem Well-Known Member

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    Moved out 2010 and used 6 year rule until 2015
    Tenanted 2010-2020

    Sole trader in 2009
     
  10. Terry_w

    Terry_w Mortgage broker licenced 4 tax/legal advice Business Member

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    the facts are getting confusing now. above you said you move back in in 2015. so once you move out you never move back in again?
     
  11. Nem

    Nem Well-Known Member

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    sorry for confusion

    Thats correct, once moved out never moved in back
     
  12. Terry_w

    Terry_w Mortgage broker licenced 4 tax/legal advice Business Member

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    then there would be 2 calculations you need to do, as outlined in my post linked above, plus factor in the business use.
     
  13. Nem

    Nem Well-Known Member

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    So to summarise:
    Purchase price in 2000 $500k
    Valuation when became IP $1,000,000 in 2010 (claimed 5 year PPOR until 2015)
    Sold $1,400 in 2020
    Hold 20 years, lived in there 10 years, 10 years rented but claimed 5 years as PPOR)

    Capital Gain $1,400,000 - $1,000,000 = $400,000

    Then the 50% CGT discount $400,000 x 50% = $200,000

    Only 5/20 of this would be taxable = $50,000

    PLUS "plus factor in the business use"

    Is that correct?

    Thanks
     
  14. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    And third element costs may play a significant part in reducing the profit pre-apportionment. Its an area where tax advice is clever and in most cases I see we can idntify benefits the taxpayer cant see,

    The above calc is quite incorrect. s118-192 market value is NOT to be used in your example for starters. In the period 2009-2010 the property had been a place of business o s118-192 is not eligible
     
  15. Terry_w

    Terry_w Mortgage broker licenced 4 tax/legal advice Business Member

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    no
     
  16. Nem

    Nem Well-Known Member

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    Because of running a business for a short period of time there or something else please?
     
  17. Mike A

    Mike A Well-Known Member

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    wrong for a number of reasons
     
    Terry_w likes this.
  18. Nem

    Nem Well-Known Member

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    Could you please help me understand why?

    What part am I misunderstanding??
     
  19. Mike A

    Mike A Well-Known Member

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    call @[email protected] your best bet
     
  20. Nem

    Nem Well-Known Member

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    @Terry_w I followed your example from the link you've supplied
    Lets ignore business usage for now.
    CGT calculation with no business usage still wrong?? What part please