How much profit will I walk away with if I sell?

I'm considering selling a property I purchased 2 years ago, I'm trying to get my head around how much profit there will be, if any.

I purchased the property for for $535,000
The loan I have is $570,000
Real estate fees are $5000 plus 2% commission
If I sell it for $650,000
And if my income was $100,000 for the year

How much would I walk away with after paying out the loan?

 

Never mind - I don’t know sorry. Hopefully someone else can help.

 

Not enough info. You need to deduct the purchase price and all sales and aquisitions costs from the sale price.
Working out the CGT is slightly different

 

what about the stamp duty and adding back depreciation? Does a CGT exemption apply? 3rd element cost base expenses?

 

Yes ok sorry ignore my calculations, I have no idea really just giving it a go. Luckily I work in health not accounting lol.

 

What more info do you need? Im just trying to work out a rough figure

 

add up all of the costs related to the property that you have not otherwise claimed.

 

Go see your accountant -

 

I asked my accountant and it went from $50,000 profit to $15,000 profit and he didn't seem to have time to tell explain it to me how he worked it out. I'm not sure if he's just giving me random figures with out working it out. I know I need a new accountant but this place goes up for auction very soon and if I'm only going to end up with $15,000 I won't sell it.

 

Pay your accountant for an hours time and they can calculate it for you.

The word 'profit' doesn't mean anything here. Have you been living in it? Renting it out? Claimed depreciation?

If your decision to sell depends on the amount of the proceeds, you are probably selling for the wrong reason.

What do you mean it goes up for auction soon? Have you already listed it? If so it's a little late to be thinking about this.

 

"How much profit will I make" is the wrong question. You may want to know

How much cash will be left after I sell, pay selling costs, discharge the loan and pay tax. This is the most useful number as it will be your final equity sitting in the bank that can be used for other decisions. To address this you need to consider:

1. What is the expected selling price
2. Deduct the expected selling costs incl marketing, auction, agent and staging and legals etc
3. Deduct the loan discharge value
4. Deduct the expected tax on the taxable element of the capital gain. You may need assistance for that part.

Note that many people self calculate gains incorrectly and ignore the "reduced costbase" which occurs when depreciation and cap allowances have been claimed. These past deductions increase the CGT amount. But only 50% of that increase is usually subject to tax. But over a long period the number does accumulate.

Sometimes people get very excited and think they are going to walk with far more than they will and the merits of selling are negligible. We regularly do pre-sale CGT estimates. Often there is no compelling purpose to sell as the equity is small and the cost to hold the property is minor. Agents dont care.

 

Original purchase price $535,000
Stampduty $28,623
The loan also has $6000 (the $6000 has already been claimed) on it that was used to fix the place up when I bought it
Bringing the loan to $569,623

Sales fees are:
$4000 for advertsing / auction fees
$1000 for the section 32
$13000 is the 2% commision if it sold for $650,000

Ive owned it for over 12 months so its eligable for the cgt deduction

So $650,000 take the sales fees of $18,000 is $632,000. Take the original purchase price, stamp duty and $6000 I spent on the place originally birings the profit down to $62,377. Acording to an online cgt calculator I would pay $22,425 in cgt bringing the profit down to $39,952. Then if my income tax is paid at 32.5% thats another $12,984.

Leaving me with a total profit of $26,968. Is this roughly correct or am I still missing something?
Are the real estate fees tax deductible?
Is the stamp duty tax deductable or would that all ready of been claimed?

 

Your tax calc is wrong. You ignored the cg discount and you double taxed yourself. Suppose its better to be conservative if its this sort of back of the envelope with a chainsaw type calculation.

 

I paid my accountant to work it out. He came back with ‘xxxx dollars will be added to each of your incomes this year.’ Much simpler for me to understand!

 

You dont know what you dont know. I recently came accross someone who checked their "seems high" CGT calc. Unfortunately it was two weeks out of time to amend.

 

May not be exact but close enough I would think give or take a few K.
Capital Gains Tax Calculator - CGT calculator

 

Yes I get told that a lot. Carry the decimal point one place ?