Capital Gains Tax

taking this thread sideways slightly, appreciate clarification from the tax knowledgeable/minded forumites - is CGT added to your income level and the total tax payable then calculated?

Eg, Profit from sale $50,000. Held for over 12 months in 1 name = $25,000 profit for tax purposes. $25,000 added to your annual income (say $50,000) = taxed on $75,000 at the appropriate rate and calcs?

I realise how you get to the $50,000 profit has a lot of ins and outs (incorporating buying costs, selling costs, depreciation claimed, not claimed, improvements etc etc). Just looking for a ballpark guide.

 

basically Yes.

 

Makes sense to me. As long as the OP is prepared to genuinely occupy the property there is no problem. The suggestion of fraud was only raised because the first post was not clear that the OP was going to genuinely occupy the property. If the OP does not genuinely occupy but claims the main residence then there is a problem. Others have tried this and been caught out.

 

thanks, yes this is what I was alluding to but it wasn't clear in the original post.

 

Right. This is exactly what I am doing. I live two streets away from this new property I've purchased, so for me it was very important to establish CLEARLY that this is my PPOR because it is very likely that I might want to sell it in the next 5 - 10 years. So all my govt lodged documents have my new address on them and I will be using that address when I file my taxes for this year. A reminder... I actually am moving into it as soon as possible and its currently empty. It already has a good amount of equity in it, I nabbed it undervalue.

If you aren't going to sell, it's probably a big fuss about nothing, as others have pointed out. You'll have far more financial benefits from negative gearing it as an IP.

 

Just make sure when you live there the utilities are in your name and you keep some power bills, water bills and gas bills as evidence of your time living in the house. For mine, I got a big lever arch file and files away bank statements, rates notices, licence renewals, water bills, power bills, gas bills, contents insurance renewals, vehicle registration and everything else while I was living there. If ATO ever asked I could hand over the file as evidence it was genuinely my main residence. They didn't ask and I probably still have the file even though I sold up years ago.