How to Calculate Capital Gains Tax on an Investment Property (2021)

When you sell an investment property, you need to consider the Capital Gains Tax you will owe. In this video, I'll run you through a basic example of how you can calculate the capital gains tax on an investment property in Australia.

-----

How to Calculate Capital Gains Tax on Investment Property (THE FORMULA):

- Date Purchased
- Date Sold

- Sales Proceeds

- Cost Base
* Gross Purchase Price
* Stamp Duty
* Legals on Purchase
* Legals on Sale
* Commission on Sale
* Non-Deductible Holding Costs

- Gross Capital Gain
- Less 50% Discount (if eligible)
- Net Capital Gain

----

[emmajohnson]

I’m a graduate accountant and have only been in my job for 3 months. You’re videos are so helpful! I am reading from the ATO and it just doesn’t stick. You explain things so clearly I feel like I’d be lost without you! 😂 thank you 🙌🙌🙌

[gemini]

Through my CPA advice, we shall calculate CGT this May & deposit the CGT amount into GESB Super, fill out a form for the ATO & then we eventually will only pay 15%.

[stephenuschi]

One fatal flaw…..you need to deduct depreciation claimed in tax returns each year from your cost base, thereby increasing tax liability….

[lisawu]

Thanks Michael for sharing your professional knowledge. I have sold my two properties at the same year. The details are as below:
1/ Residential 10 year and rent for 10 years.
2/ sold before lived in 10years . Initial purchased rental for six years.
My question is that Can I just nominated the second house as my principle place of residence, ignore the capital gain from house 2/. Or in the other words I just choose the lower capital gain to pay Capital gain tax.
Thanks 🙏

[newsupdate]

Good explanation here and informative on complicated concepts .

[F.mebratu]

Is it date purchased of a block of land or date of block of land registered or titled ?

[humblerecruitment-pbpj]

I love how much money buzz light year charged you. Great video, cheers

[laural]

Great video thank you for sharing 👌🏽 Is it possible to post an altered calculation for Airbnb when renting out a single room? Throwing up the long term effects of that platform 😵‍💫

[imbora]

Hello, I'm subscribing hard.
I am a tax official at the National Tax Service in Korea. I was conducting research on Australian property assessment methods and thank you for your useful information. (I'm going to Australia early next year to collect details.)

If the acquisition value or transfer value is unclear, I wonder how the Australian National Tax Service evaluates real estate, stocks, and cryptocurrency.

In Korea, real estate is valued first at the market price (6 months before and after the transaction), and if there is no market price, the law stipulates a supplementary evaluation method (annually discloses the market price). Can't you find out the details of this?

[JayWilkins-mveh]

Hi Michael, great video. Curious, if you purchased a block of land, then built an investment property on it 2 years later. Would the GST be calculated on the purchase price of the land or land and building combined?

[thuduong]

Hi Micheal, thanks for reviewing all the useful information. Im so glad that Are u able to review an Australian living oversea and selling the primary property in Australia, how much tax they need to pay? Can the Australian keep the Australian resident while they r living oversea?

[thupham]

Question:
If you and your spouse each have a home can each spouse select one house as their main residence provided both homes are not used as income or do you have to select one property to be your joint main residence and the other must be subject to CGT.

[RabidRodent]

Hi, One of the reasons to purchase a rental property is to get the tenant to pay your mortgage off for you. If a buyer purchases a property for $500k and puts down a 20% deposit / $100k, they will need a $400k mortgage. If the mortgage on the property is paid off over a 20 year period, but hasn't increased in value and the owner sells for $500k, would the owner be required to pay any capital gaing? (we can ignore all the incidental costs) Although the property hasn't increased in value the owner now owns the home outright so has 'gained' $400k in equity / profit.

[basiljoseph]

Hi Michael,
How do you calculate the 12 month duration for 50%CGT deduction. Is that from the contact date or is it from the settlement date?

[RB]

Can I ask how does CGT work if I have lived in my home for 30 years and decided to turn it into an investment property. I would be calling another place my primary place of residence, so if I was to sell my original place would the CGT be calculated from the price I paid 30 years ago or the value it was at the time it became an investment property?

[sunflower-gx]

Capital gains tax eg ($240k-180k)45%tax rate +51667=78667 tax you pay to ATO, not like what you said 240k x 47% tax rate =112800

[cablestick]

Terrific video! Q: Can we factor inflation into the gross purchase price?