Question:
I am thinking of selling some land. I will pay out the mortgage on it and have $80,000 profit.
Is there any way I could minimize the capital gains tax on sale of land?
What sort of capital gains tax would I pay on land sale?
Answer:
If you have the property for more than 12 months, you are entitled to a 50 per cent discount and so would pay capital gains tax (CGT) on just $40,000 in profit.
You could minimize the capital gains tax on sale of land by making tax-deductible contribution to your super.
CGT would be calculated by adding this amount to your taxable income in the year the sales contract was signed, so it would be in your interests to have your other income as low as possible in that year.
You can download a free Land Capital Gains Tax Calculator from Investment Property Calculator.
Please note: All the costs including the cost of the land, the initial stamp duty, legal fees etc when purchasing the land, any expenses like rates, selling agents fees & advertising fees are deductible from the final sale price when calculating the CGT. If you haven’t claim any interest payments, the interest payments are also deductible.
Very useful summary on the CGT implications. Just wondering if there are any further deductions if I was an Australian Citizen but not resident for the last 11 years?
No. Non residents for tax purpose attract different tax rate and I believe you might need to pay more.
Any idea what the implication or liability might be in the example sited, or where I could obtain further information?
Many thanks in advance!
The Non-residents rates apply. See the rates from this ATO page:
http://www.ato.gov.au/content/12333.htm
You will still be able to have the 50% CGT discount if you hold the property more than 1 year.