How to calculate CGT when buying a percentage of an existing property?

Hi All,

Having some trouble trying how to calculate CGT on an existing property where I want to buy a stake from the other owner.

Recently I posted another thread here where I wanted to transfer ownership of shares from joint to say a 80/20 arrangement. After investigating you cannot apportion percentage of ownership in shares contrary to property!

Hence in an attempt to have more deductions on my income, and not being utilised on my wife's lower income. I am now looking to buy a 30% stake in a property we currently own 50/50.

Any guidance is appreciated on how I can figure out how to calculate the CGT component.

• purchase price - $500k
• sale price - lets assume $600k?
• date acquired - April 2014
• date sold - now August 2019

Also looking at doing this inside FY20 given wife is on mat leave with reduced income too!

Cheers
ng

 

They are selling 30% so work out the cost base and x 30%. Capital gains is sales price/market val less cost base.

Don't forget the 50% CGT discount

 

So it would be;

(600k-500k) * 0.5 * 0.3 = $15,000?

 

less prob

 

assuming it is an IP ?

will also need to make adjustments to the cost base for the capital allowances (depreciable plant & equipment) and the addback for capital works deductions

 

Personally I would be seeking tax advice on at least checking the calc. And the buyer doesnt pay CGT - Only the seller on their interest. The stamp duty impact of a 30% transfer will be a major cost to consider in addition to any CGT impacts. Its often reason why people dont do it. There is not likely to a be a duty concession based on the info provided.

ie In NSW the duty (and CGT) would be based upon market value (not a chosen price) and the duty may be $6800+

Our CGT checklist may assist some of the key issues to capture & consider. ie Duty paid on acquisition, legals and so on....The ability to refinance the existing debt is also a matter to address. If a new loan can be drawn a higher deductible loan may assist the higher income earner with a larger loss. The wife may use the proceeds to reduce the original loan and maybe even paydown some non-deductible debt. The refinancing principle is a debt recycling strategy that may overlook.