Arnold
CibbuanoAcquiring, Owning and Selling Property in a Nutshell Part 2
October 24th 2006 00:31
This is the second part of my summary of the Australian property acquiring, owning and selling in a nutshell summary. Yesterdays post covered the acquiring and owning phase. Today I look at the selling/disposing of a property phase and finish up with some important general advice regarding capital gains tax and record keeping. Hope you’ve learnt something or refreshed you’re memory on some of the taxation related issues of the real estate game.
Step Three: Disposing of a Property
There are several ways you can forfeit the ownership of your property;
1. Sell
2. Give it away
3. Lose it in a court settlement (ie in the case of a broken marriage)
4. Forfiet through a compulsory acquisition (ie, not making mortgage repayments)
Things you need to know;
1. When you dispose of a property, you may need to pay capital gains tax.
2. The capital gains tax is applicable to your capital gain. This is calculated by taking the difference between your capital gains ‘cost base’ (the cost of owning the property, purchasing and ongoing expenses) and the ‘capital proceeds’ (the amount of money you receive when you sell the property.
3. When you own a property for more that 12 months the capital gain may be eligible for a 50% reduction.
4. Even just transfer the name of ownership on a property may make it eligible for capital gains taxation.
One really important thing to remember when you own a property is to keep a very good record of all the expenses you’ve made on the property over the course of your ownership. You need these records to justify and tax deductions you may be eligible to claim. Without them you’ll find yourself paying more tax than you should.
Another important area to keep a good record of is the cost of building and any depreciating assets associated with the property. These records are used to property calculate you capital gains when it comes time to sell.
Step Three: Disposing of a Property
There are several ways you can forfeit the ownership of your property;
1. Sell
2. Give it away
3. Lose it in a court settlement (ie in the case of a broken marriage)
4. Forfiet through a compulsory acquisition (ie, not making mortgage repayments)
Things you need to know;
1. When you dispose of a property, you may need to pay capital gains tax.
2. The capital gains tax is applicable to your capital gain. This is calculated by taking the difference between your capital gains ‘cost base’ (the cost of owning the property, purchasing and ongoing expenses) and the ‘capital proceeds’ (the amount of money you receive when you sell the property.
3. When you own a property for more that 12 months the capital gain may be eligible for a 50% reduction.
4. Even just transfer the name of ownership on a property may make it eligible for capital gains taxation.
One really important thing to remember when you own a property is to keep a very good record of all the expenses you’ve made on the property over the course of your ownership. You need these records to justify and tax deductions you may be eligible to claim. Without them you’ll find yourself paying more tax than you should.
Another important area to keep a good record of is the cost of building and any depreciating assets associated with the property. These records are used to property calculate you capital gains when it comes time to sell.
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