When you sell an investment property, the capital gain or loss is the difference between what you paid for it and what you receive when you sell it.
Capital gains are taxable. The gains are added to your taxable income and taxes payable at the usual margin rates.
However, if you have held the investment property for more than 12 months, /i>you receive a 50% discount on the gain that you made on disposing of it ie: you only pay tax on half of the capital gain that you make.
If you make a capital loss when you sell your rental property, you can not claim the loss against your income. However, you can claim the loss against any capital gain you made in the same year.
If your capital losses are more than your capital gains, or there are no capital gains in that year, capital losses can be carried forward and deducted against capital gains in future years.
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Capital gains tax was introduced in September 1985, and any real estate purchased after that date is subject to capital gain when it is sold.
Assets which are free from capital gains tax include your family home, and most personal assets such as furniture.
Understand How Capital Gains Tax On Profits Is Calculated
Watch this video for an explanation on how the ATO assess the sale of an asset that has been held for over 12 months, and whether the 50% CGT discount applies.
Capital gains made by Australian Residents anywhere in the world are subject to capital gains tax.
There are ways of legally reducing or even avoiding capital gains tax when you sell an investment property all together.
Refer to the page How to Avoid Capital Gains Tax When Selling Property / Real Estate
This Audio File Explains How The ATO Assess The Sale Of Property Or Shares And Whether CGT Applies
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