Arnold
CibbuanoAcquiring, Owning and Selling Property in a Nutshell
October 23rd 2006 00:55
I’m breaking this post up into two installments for today and tomorrow. Basically I’m going to cover the nuts and bolts of acquiring, owning and selling and property with a focus on the tax side of things. This will be a good little check list for anyone going through the stages of getting a place and making sure they’re up to date with government requirements.
Step One: Acquiring a Property
There are several ways you can claim ownership of a property.
1. Buy
2. Inherit
3. Win it as a prize
4. Accept it as a gift
5. Awarded after a marriage fall out
Things you need to know;
1. The names you put on the purchase contract will determine who must declare taxable income from the property and who is entitled to claim expenses from the property.
2. There are certain costs associated with buying a property that can be tax deductible or can be included in the capital gains tax ‘cost base’ which is important when it comes to selling the property.
3. The date that appears on the contract is the relevant date of purchase in terms of capital gains tax. The settlement date has no bearing on capital gains tax purposes.
Step 2: Owning a Property
When it comes to ongoing taxation associated with the ownership of your property, these are a few things that will affect the ongoing tax associated with your property.
1. Renting out the property (inclusive of renting out a part of your own residence)
2. Making improvements, renovations and repairs.
3. Subdividing
4. Running a home office or business
Things you need to know;
1. Any and all rental income from the property must be declared in a tax return.
2. Tax deductions on rental properties include, repairs and capital works, rates, interest, insurance, real estate agent fees and depreciation.
3. Any expenses that arise from your property during ownership that can’t be claimed as tax deductions might be able to be included in the capital gains ‘cost base’ value.
4. If you decide to rent your private home it is usually necessary to get a market valuation before you start renting it.
5. Repairs and improvements attract different tax deductible rates.
6. When you subdivide land, there are no immediate capital gains requirements, however, when you sell the either a portion or all the land, capital gains will be applicable.
7. Running a home business or commercial enterprise may make you liable for some capital gains when you sell.
Step One: Acquiring a Property
There are several ways you can claim ownership of a property.
1. Buy
2. Inherit
3. Win it as a prize
4. Accept it as a gift
Things you need to know;
1. The names you put on the purchase contract will determine who must declare taxable income from the property and who is entitled to claim expenses from the property.
2. There are certain costs associated with buying a property that can be tax deductible or can be included in the capital gains tax ‘cost base’ which is important when it comes to selling the property.
3. The date that appears on the contract is the relevant date of purchase in terms of capital gains tax. The settlement date has no bearing on capital gains tax purposes.
Step 2: Owning a Property
When it comes to ongoing taxation associated with the ownership of your property, these are a few things that will affect the ongoing tax associated with your property.
1. Renting out the property (inclusive of renting out a part of your own residence)
2. Making improvements, renovations and repairs.
3. Subdividing
4. Running a home office or business
Things you need to know;
1. Any and all rental income from the property must be declared in a tax return.
2. Tax deductions on rental properties include, repairs and capital works, rates, interest, insurance, real estate agent fees and depreciation.
3. Any expenses that arise from your property during ownership that can’t be claimed as tax deductions might be able to be included in the capital gains ‘cost base’ value.
4. If you decide to rent your private home it is usually necessary to get a market valuation before you start renting it.
5. Repairs and improvements attract different tax deductible rates.
6. When you subdivide land, there are no immediate capital gains requirements, however, when you sell the either a portion or all the land, capital gains will be applicable.
7. Running a home business or commercial enterprise may make you liable for some capital gains when you sell.
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