How much capital gains tax need to pay

Discussion in 'Accounting & Tax' started by Jorgem, 15th Jul, 2017.

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  1. Mike A

    Mike A Well-Known Member

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    those calculators assume you know your cost base.

    i find many people forget or dont even know about the division 43 capital allowances adjustment to the cost base.

    so the problem with these calculators is garbage in/garbage out.
     
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  2. Mike A

    Mike A Well-Known Member

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    actually i just had a look and that calculator is horribly wrong.

    it includes non capital costs of ownership and has examples land tax, rates, etc. If those costs have been claimed or could be claimed they are NOT added to the cost base.

    they only get added to the cost base if they are third element costs. this calculator is very wrong.

    the author is nila sweeney and when you look at her profile looks like she is content writer probably from the Philippines. Shows that a Google search and a little research doesnt mean you get it right
     
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  3. juxt1n

    juxt1n Well-Known Member

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    So is there a good online calculator to use even though its an estimate?
     
  4. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    I have one. Its in my head. Mike has a good one that works the same way ;)
    It also tends to save mistakes. I see a lot of different mistakes.

    I do encourage taxpayers to do it themselves then run their numbers past a adviser. It cheaper than handing me a long story and no records. It also ensures no silly mistakes.

    One I did two years ago saved the taxpayer $160K....After he saw a tax agent.

    A few areas of major mistake
    - Non residency periods (a new and old problem)
    - CGT costbase errors (leaving out some items)
    - Main Residence rules
    - Choice of main residence
    - Renovation rules
    - Partners thinking they each get an exemption
    - Dates
     
  5. juxt1n

    juxt1n Well-Known Member

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    I wish i was Charles Xavier. :)

    I think the Main Residence rules is where most people get stuck on. For me I have an investment and rented out day 1 after purchase. No Renovations, non non residential period etc . Just pure investment from day 1 (never step foot inside the house after purchase date).

    So the CGT would be straight forward wouldn't itbe. Sell price, cost price, current income (combined with wife) ?
     
  6. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Yes. But if you were non-resident or changed residency (to the IP) or anyone dies it gets more complex.
     
  7. juxt1n

    juxt1n Well-Known Member

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    Nope none of that but then again with more than 50% of couples parting ways we're not immuned :)

    So lets get and example.

    Bought: 300,000 (in 2004)
    Sold: 1000,000 (in 2017
    Combine Income: 80,000
    (Purchased purely for renting and from day 1, ownership is in both man and woman)

    How much roughly will i pay CGT?
     
  8. Terry_w

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

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    Assuming you own 50% or are joint tenants then you share would be

    $600,000 profit
    x 50% CGT discount
    = $300,000
    your share is $150,000

    your new taxable income becomes your existing income plus the above $150,000

    Your capital gains tax would be tax on the above less tax on what your other income is now - no more than $75,000 probably.

    The gender of the owner is irrelevant - you will pay the same whether a man, woman, both or neither.

    (very rough calcs with lots not taken into account).
     
  9. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    What does the above bold comment mean ??

    CGT events arising from a martial split can be concessional treated under CGT rules. If a couple do this prior to divorce it may be taxable. As part of a property settlement approved by the Family Court tax may be avoided in some instances.

    Seek personal advice if this is the case. If its a remark about martial relationships not lasting its possibly of no relevance
     
  10. juxt1n

    juxt1n Well-Known Member

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    So the profit is $1,000,000 - $300,000 = $700,000. How did you get $600,000?
     
  11. Terry_w

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

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    Lol, sorry i can't add up.
     
  12. juxt1n

    juxt1n Well-Known Member

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    Mate, I could do with that 100,000 not taxed!

    So all in all it's roughly:

    50% of $175,000 (my share) + tax on my $Salary (for that selling year). Or
    50% of $175,000 (my share) - tax on my $Salary (for that selling year).

    You said "less".
     
  13. Terry_w

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

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    Say your income from work etc is $100,000
    If you make $175,000 taxable gain after all costs your new taxable income would be $275,000 and you would pay tax on this.
     
  14. juxt1n

    juxt1n Well-Known Member

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    Yep got it! thanks.
     
  15. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    And note that when the CGT amount is large a range of other issues can add to costs

    - Help debt repayment amounts
    - Div 293 tax on super contributions
    - Private health insurance offset
    - Medicare levy surcharge
    - PAYG Instalment system
    - Centrelink / family benefits etc
    - Child support
     
  16. juxt1n

    juxt1n Well-Known Member

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    By "add to the cost" would this be adding to the CGT-able amount? I am thinking cost is money you spend not receive.
     

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