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

[@emmajohnson5260]

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 🙌🙌🙌

[@sunflower498-g7x]

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

[@humblerecruitment-pb5pj]

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

[@philipmurphy3546]

I could watch you all day. 😍

[@F.mebratu]

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

[@gemini2261]

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%.

[@MichaelFrancisVids]

Yep you can use super contributions as tax deductions to minimise the overall tax you pay!

[@newsupdate6773]

Good explanation here and informative on complicated concepts .

[@lisawu5980]

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 🙏

[@JayWilkins-mv7eh]

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?

[@MichaelFrancisVids]

Your capital gain would be calculated like this: Sale price - land price - development costs = capital gain

[@thupham6855]

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.

[@laural1369]

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 😵‍💫

[@thuduong5591]

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?

[@basiljoseph2120]

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?

[@stephenuschi]

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

[@imbora4129]

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?

[@anhha9607]

Thank you Michael ❤

[@RabidRodent69]

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.

[@MichaelFrancisVids]

Hi Matt B, I get what you're saying but capital gains is based on price rather than equity. So in your example: sale = $500k, purchase = $500k, capital gain = $0

[@RB13560]

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?

[@MichaelFrancisVids]

Hey RB, that’s a great question! Lots of people ask this so I’m going to make a video about it… stay tuned

[@RB13560]

@@MichaelFrancisVids oh wow really, thank you so much mate

[@cablestick]

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

[@MichaelFrancisVids]

You can if you owned the asset before 21 September 1999. This is called the indexation method. However, if you choose to use the indexation method you cannot discount the gain by 50% which is a big loss! In most cases, you will get a better result (smaller capital gain) by using the discount method.

[@sunflower498-g7x]

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

[@MichaelFrancisVids]

Hey Sunrise, yep you're completely right! I just kept it super simple in this video and didn't properly account for the tax brackets Most clients I speak to who are investing in property are also high income earners and are already in the top tax bracket - so we calculate the capital gain based on the estimated 47% because that's the tax that is relevant to this transaction