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Capital Gains Reports


Capital gains tax is quite a complex issue in taxation, so therefore we can only touch on the basics that relate to investment properties and property development.

You own an investment property (Your “Capital Gain”) – This is added to your income such as rental income, wages and taxed at your ordinary tax rate.

What is a Capital Gain?

Capital Gain is the profit between buying and selling the property. If the sale is more than you paid for it you make a capital gain. If the sale price was less than the purchase price you have a capital loss.

A capital loss is not offset against your other income to produce a refund. They are carried forward until such time you can use them to offset against a capital gain (in the future). 

 What costs are included in the purchasing of property?

  1. Stamp duty
  2. Buyers agents fees
  3. Bond used in purchase
  4. Real Estate commission on the sale of the property
  5. Legal fees on the sale
  6. The purchase price
  7. Adjustment fees
  8. Interest and rates if applicable

Is all property subject to capital gains tax?

Yes however, there are some exemptions such as your principle place of resident (your family home).

If you turn your family home into an investment property, you can still claim that it is your principle place of residence for up to 6 years from the date you vacate the property yourself. You must have lived in it first and you must return within the 6 year period in order to claim the 6 year exemption . If you return to the property after the 6 years, you will have to pay capital gains when selling the property.

Example of a Capital Gain:

If you make a profit after all costs have been deducted of example $100,000, so 50% of this claim is exempt because you have owned the property for more than 1 year. The capital gain on your tax return would be $50,000. The very worst you would pay would be $25,000 on this capital gain depending on your tax bracket.


When is a date of purchase?

Date of purchase is when you sign the contract even if you bought off the plan and don’t take possession for 6 months when it is completed and you have paid the balance of the purchase price and sell 12 months later. The ATO will calculate that you owned the property for 18 months and the capital gain starts from the signing of the contract.



Points to remember regarding Capital Gains:

  1. Capital gains is not as bad as it might seem
  2. When changing family home to investment property get a valuation
  3. Remember a gain on your family home is exempt from tax
  4. A trust will often reduce tax ( you need to discuss this with your Accountant)
  5. Keep good records of all costs involved in buying an investment property.
  6. Repeated sales of your own home could be viewed as a income by the ATO( ie if you regularly buy a home, live in it for a short period of time, sell and buy again, repeating this process many times)
  7. Seek advice from you Financial Advisor or Accountant before you sell (this may save you tax on the sale).

Contact  our friendly staff to discuss your individual requirements, and how CMR and Associates can assist with your Capital Gains Report.

1300 131 658