CGT on Investment property sale

Discussion in 'Accounting & Tax' started by redsquash2, 19th Oct, 2019.

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  1. redsquash2

    redsquash2 Active Member

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    How does depreciation factor into a newinvestment property I bought after 2010 and then sell 10 years later, when calculatng CGT.
    i have the depreciation schedule btw

    Bought for $300,000 sell for $600,000
    Profit of $300,000

    CGT calculation $300,000x .5 = $150,000 added to my income
    Whats wrong with my calcualtion? (ignore purchasing costs just to keep it simple for the time being)

    I will pluck out a total figure of $20,000 for depreciation
    An explanation using the curent example would be very useful
    thanks
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    If by 'depreciation' you mean capital works:
    Cost base would be $300,000 less $20,000 = $280,000

    Capital gains = $600,000 - $280,000 = $320,000
    apply 50% CGT discount = $160,000

    $160,000 is the income to the taxpayer, assuming an individual.
     
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  3. redsquash2

    redsquash2 Active Member

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    Great .All understood.

    Solicitors fees/advice, conveyancing costs, and Buyers agent fees can be addedd to the Cost base.Is that correct??
     
  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Generally, but it depends
     
  5. willy1111

    willy1111 Well-Known Member

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    Depreciation is normally broken down into 2 parts...capital works and plant and equipment.

    Is depreciation of plant and equipment taken into account for CGT calcs?
     
  6. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Yes, I just wrote about balancing adjustments in another post
     
  7. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    A range of issues can impact CGT and lead to erors that increase tax or underpay tax.

    eg : Is the cost of the assets that were depreciated included in the costbase ?? eg The oven you bought 2 years ago needs to be added to the historical costbase.
     

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