Calculating Capital Gains Tax and Property investment

There are three main points to consider in calculating capital gains tax on your investment property:

a) The difference between costs that can be written off as part of negative gearing and those that form the ‘cost base’.

b) If you are an individual and have held the property for than 12 months, you are entitled to the CGT discount of 50% ie your profit is halved before tax is applied to it.

c) Capital losses can only be used to offset other capital gains for tax purposes. It is not possible to use capital losses to reduce taxable income from other sources.

Below is a worksheet that can help you calculate your capital gains tax. Note this is an estimation only.

Important note: All costs included are costs that have not been claimed as part of normal annual tax return ie items cannot be claimed twice.

The Australian Taxation Office has a worksheet to work out the Capital Gain or Capital Loss. Click Here to download. You should consult your accountant to ensure that any calculations are calculating correct the method.