In Australia, capital gains tax (CGT) is applied to the profit made from the sale of an investment property. The CGT is calculated by subtracting the cost of the property (including acquisition costs and improvement costs) from the sale price.
Here are some key points to keep in mind when it comes to CGT and investment properties in Australia:
1. CGT applies to all types of investment properties, including residential and commercial properties.
2. If you’ve owned the property for more than 12 months, you may be eligible for the CGT discount, which is currently set at 50%. This means that only half of the capital gain is subject to tax.
3. CGT is calculated on the gain made from the sale of the property, not on the sale price itself.
4. You must declare any capital gain made on an investment property on your tax return.
5. If you’re planning to sell an investment property, it’s a good idea to seek advice from a tax professional to understand your CGT obligations and how to minimize your tax liability.
6. It is also important to keep records of all the expenses and costs you incurred while owning the property, as these can be used to reduce your capital gain when you sell the property.
7. Some expenses that can be used to offset the capital gain include legal and conveyancing fees, property inspection fees, and costs related to improving the property.
Keep in mind that the tax laws and regulations are subject to change, so it’s always a good idea to consult a professional for the latest information and advice.