Capital Gains Tax Australia Selling Property

Expat Tax Online

CGT when selling your rental property

How CGT applies to your rental property

Capital Gains Tax (CGT) is a tax on the profit you make when you sell an asset. This includes property, such as a rental property. The amount of CGT you pay depends on a number of factors, including the length of time you have owned the property, the amount of profit you make, and your personal income tax rate.

What expenses can you include in CGT?

When calculating your CGT liability, you can deduct certain expenses from the sale price of the property. These expenses include:

• The cost of acquiring the property
• The cost of improvements to the property
• The cost of selling the property

You can also deduct any losses you have made on other properties in the same tax year.

Exemptions from CGT

There are a number of exemptions from CGT, including:

• The main residence exemption
• The 50% discount for investors who have owned the property for more than 12 months
• The partial exemption for small business owners

If you meet the criteria for any of these exemptions, you may not have to pay CGT on the sale of your rental property.

How to calculate your CGT liability

To calculate your CGT liability, you need to know the following information:

• The sale price of the property
• The cost of acquiring the property
• The cost of improvements to the property
• The cost of selling the property
• Your personal income tax rate

Once you have this information, you can use the following formula to calculate your CGT liability:

``` CGT liability = (sale price - cost of acquisition - cost of improvements - cost of selling) x your personal income tax rate ```

For example, if you sell a rental property for $500,000, and you have owned the property for more than 12 months, your CGT liability would be calculated as follows:

``` CGT liability = ($500,000 - $200,000 - $50,000 - $25,000) x 0.5 ``` ``` CGT liability = $225,000 x 0.5 ``` ``` CGT liability = $112,500 ```

In this example, your CGT liability would be $112,500.

Paying your CGT liability

You need to pay your CGT liability to the Australian Taxation Office (ATO) by the due date for your tax return. The due date for your tax return is 31 October for individuals and 15 May for businesses.

You can pay your CGT liability online, by phone, or by mail.

Getting help with CGT

If you need help with CGT, you can contact the ATO on 13 28 61 or visit their website at www.ato.gov.au.

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