Capital gains tax

Hi everyone
Im just looking to get some information about paying capital gains tax on a investment property in my father in laws name
They have done us a favour by purchasing the property while I was on low income and we are looking to sell it now and have them gift us the profit

The home was purchased for 377k 3 years ago and we had refinanced on it to pay out some personal debt bringing it to 460k (last year)
The property is now valued at 580k so roughly 120k left in equity (I think)
What roughly will we be paying the cgt on and how much. will it just be the 120k or the difference between the original purchased price to what it is valued now
And are we entitled to the 50% discount

Thanks

 

1. tax payable will depend on your father in law's other taxable income
2. assuming you have never lived in it.
3. you will need to adjust the purchase price and sales price for plant & equipment
4. need to add back division 43 capital works claimed
5. held for more than 12 months so should be eligible for 50% CGT Discount

tax looks like it could be anywhere between $25k to $50k

 

Pity you didn't seek advice as it could have all been tax free.

 

Exactly.

 

We haven’t sold the property yet and we haven’t taken any steps to sell it yet I’m still living in the property and have since day one, do you have any advice

 

I’ve lived in it since we first built it if that makes any difference

 

Yes get some advice on whether you could argue the father was acting as trustee for you. Have you been paying everything and can you prove this? Did you pay the deposit?

 

As @Terry_w says might be held on trust for you by your father. evidence will be key. seek a private ruling. might end up paying no tax.

 

This part wont increase the interest tax deduction and would be a % that is non-deductible BUT this will also reduce the CGT profit :
and we had refinanced on it to pay out some personal debt bringing it to 460k

That could even assist to demonstrate Dad was holding it in trust perhaps ?

 

sometimes peoples definitions of words differ from their ordinary meanings!
"we" generally means me and another, but if Dad owns the property the son or daughter could not be on the loan, so I think 'we' might mean 'dad' in this case.

 

For clarity.
Whose name is on the title?

also is dad on a pension etc?

 

Okay I’ll seek advice about that
I’ve been paying for the loan since day

so the title is in my parters dads name
We have been “renting” it off them since the land was purchased. He used his equity to take out the loan and me and my partner have serviced it since day one, everything is in his name but

 

Sorry mate I should have been abit more clear with this, so it’s me and my parter “renting” the property, but the title is in her dads name

 

Also my partners dad is not on the pension, he retires in 6 years

 

So “bob” has taken out the loan for land and house,
And me and my parter have just been “renting” it through him
Sorry about the confusion

 

sounds like i just saved you $50k.

 

Dad may not have saved $50K

 

It depends. If dad is trustee he has saved $50k on tax he otherwise would have paid

 

Have you been paying dad rent, and has he included rent, interest, etc in his personal tax return?

 

good point that $50k saving might have disappeared