Join our investing community

Capital Gains Tax

Discussion in 'Accounting, Tax & Legal' started by Koji, 15th Jun, 2011.

  1. Koji

    Koji New Member

    13th Jun, 2011
    Sydney nsw
    a bit of advice pls

    I am about to retire. I have for 12 years an investment unit in Qld. Worth $350k it owes $100k I want to sell. How do I work out the amount of capital gains tax to pay and is it best to sell before or after retirement.
  2. AsxBroker

    AsxBroker Well-Known Member

    8th Sep, 2007
    Sydney, NSW
    Hi Koji,

    You should speak to an FPA registered Financial Planner or your tax adviser.


  3. Rob G.

    Rob G. Well-Known Member

    6th Jun, 2007
    Melbourne, VIC

    You need to talk to a registered tax agent for advice on tax.

    The agent will need to know your costs of acquisition plus incidentals and any depreciation claimed.

    This will enable them to work out the cost base to subtract from your sales proceeds.

    The net figure will be subject to CGT, hopefully with a 50% discount.

    If your income will be lower after retirement, it may well be better to sell then because your marginal tax rate will be lower.


  4. funkandjunk

    funkandjunk Member

    28th Jun, 2010

    Hi Koji,
    I definitely agree with the earlier posters that you should seek advice from an accuntant or a financial planner to understand your options.

    To get you thinking, here are my thoughts.

    Firstly, one would definitely need to know your gain on the property. You mention you will get approximately $250K net but this does not tell us your gain on the property.

    Of course if you sell in the year where you have been working throughout the year, the gain discounted by 50% will need to be added to your other income. You will then pay tax according to usual rates.

    However, If you sell it in a year where you have not worked or worked for a small period, then presumably your other income is les. Which may mean that less tax is payable overall as compared to selling in the year before retirement.

    Once you establish the right time to sell, a qualified practitioner will be able to assist with minimizing the tax on the growth, hopefully down to 15%.

    There are some common strategies to assist with reducing tax in IP sale. In the year befoee retirement, it might mean that there is a bigger benefit in increasing salary sacrifice into superannuation. If the property was sold in the year of retirement or post retirement, you may be eligible to claim a deduction for putting personal superannuation contributions.

    Remember, the limit on deductible or salary sacrifice contributions is $50,000. How much of this $50,000 can you can use depends on hour current salary sacrifice + SG.

    Speak to a qualified person to go through your options but timing your exit from work, your age at that time will be critical factors in options to reduce tax payable on capital gain.

    Hope this assists and happy retirement.