Indeed, another important aspect to consider is the timing of the CGT event. If you do not have any other capital gains, or you have already reduced your capital gains to zero and still have losses left over, then your capital losses carry over to the following tax years until they can be utilised. Instead, you can use it to reduce any other capital gains which occurred in the same tax year. You do not pay tax on a capital loss, but you are not able to claim it as a tax deduction either. If your cost base is higher than your consideration, then you will have lost money on your investment. However, in the real world, this does not always happen. Ideally, we would always make money on our investments. However, if instead this property was rented to your auntie and uncle, and the property was actually worth $1m but you sold it to them at a discounted price, we would need to use $1m as your consideration and the actual capital gain would be $400,000.įurther, for the sale of an asset, generally if you have held that asset for more than 12 months, you are eligible to reduce your capital gain by 50%, known as the CGT Discount. Again, this can change in certain circumstances such as where there is a period of private use (which can be exempt) or whether related parties are involved as well.įor example, if you sold your rental property for $900,000 but you purchased it for $600,000 a few years earlier, then your capital gain would be $300,000. The cost base is typically what you have paid to purchase the asset. How is CGT calculated?Ĭonsideration less (-) cost base = total capital gain / lossĬonsideration is generally what you receive for the sale of the asset, but it can sometimes change depending on the CGT event or whether there are related parties, such as family members, involved. It also excludes assets where other tax rules may apply, such as equipment which is depreciated (or claimed over several years), or assets purchased before 20 September 1985 (before CGT came into effect). Some assets are exempt from CGT with the most common examples being the family home and vehicles such as cars or motorcycles. The capital gain is added to your income for that year, meaning you pay tax at your marginal rate. There are many types of CGT events, but the most common ones are the sale of a CGT asset, such as property, shares or units held in companies as investments.ĬGT is a type of income tax, so it ties in with the preparation of your tax return each year. What is CGT?Ĭapital Gains Tax (CGT) is paid on profit earned when a CGT event occurs.
Whether it is selling an old property to purchase a new one, or realising some returns from investments to put the cash to better use, this will generally be something that will apply to you at some point in time. Chances are, as a medical professional, you will incur a Capital Gains Tax (CGT) at some stage throughout your working life.
0 kommentar(er)
