CGT when selling property

How is CGT calculated when selling a property? Is the CGT paid based on your actual income tax rate for that year?

Eg. Say your income was $0 for the year. For simplicity purposes say that you made $500k on a property sale after doing all the cost base additions, etc. Since the property was held for over a year you would get a 50% discount. But since your income was in the 0% tax bracket, would that mean that you wouldn't be up for any tax on that $500k?

Or would that make your taxable income become $250k (due to the 50% discount). Therefore putting you in the 45% tax bracket & using the ATO's estimated tax calculator, the taxable income is $85,732.

 

Someone asked this exact same question last week. The gain is added to your other income - $250k in your example

 

Ok thanks, I thought it must've been added on. The other scenario was too generous.

 

Many issues determine how much income is added. Thats the technical bit

 

Isn't CGT calculated at 49.5% regardless of income? Obviously with the 50% discount after 12 months. Isn't that why it is recorded separately on a tax return?

 

No - now it is just taxed as if it is ordinary income - so you get the benefit of any lower tax rates that may apply on your income level.

 

And also subject to medicare and other surcharges which may apply based on income thresholds. eg Div 293 tax. Its common to find taxpayers smacked with HELP debt, medicare levy surcharge etc and other issues when they have a large CGT gain

The CGT profit may also be split between owners - One spouse may have low taxable income, another may have CGT losses carried forward etc.

 

Imagine a person not working selling shares with a $40k capital gain. could be no tax payable

 

Ok Cool. So if I was to sell a property that is currently in my name. And my partner doesn't work, I could conceivably add my partners name to the property and have the CGT split between us? How hard is it to add a partners name to a property and what time frame do they need to hold it for?

 

No because that would be a transfer and trigger CGT

 

50% CGT for you to "transfer" 50% to partner. Perhaps stamp duty too (50%). And legal fees but these wont normally be major. Issue could be that 50% of any loan loses its portion of deductibility too.

Its one to get legal and tax advice on before acting

 

Here I was worried about stamp duty, I guess that one is out.

 

Esp in QLD. QLD has very tough duties rules