Capital Gains Tax Calculator
Need to estimate your capital gains tax quickly? Our capital gains tax calculator provides an estimate tailored to your situation. This guide will help you understand the results and how capital gains tax works.
Simply enter the purchase price and sale price of your property, your taxable income and whether you have held the property for at least 12 months. Then enter the cost base of the asset – for this calculator these are the incidental costs you incurred in buying, selling and holding the property excluding the purchase price of the property.
It is important to note that your capital gains tax estimate and the information provided is intended as a guide only. It is important to seek legal and financial advice in relation to your personal financial circumstances.
What Is Capital Gains Tax?
Capital Gains Tax (or “CGT”) is a tax on the profits from the sale or disposal of a CGT asset.
A capital gain arises when you dispose of an asset and the sale price is greater than the price you originally paid for the asset.
When you calculate capital gains, subtract the cost base of the asset from the capital proceeds. The cost base includes the price you paid for the asset, and other costs you incurred to hold it and dispose of it or sell it.
What Is The Formula For Calculating Capital Gains Tax?
The formula for calculating capital gains is net capital gain = capital proceeds – cost base. This amount is then included in your assessable income for the relevant financial year and taxed at the applicable rate.
Key Takeaways
- The Capital Gains Tax Calculator provides an estimate of CGT liability for assets sold, and includes various financial factors such as taxable income, and purchase and sale costs.
- The amount of Capital Gains Tax payable depends on the duration of ownership, the entity type, and the applicable marginal tax rate.
- CGT liability can be managed through various strategies, and exemptions or concessions may be available, particularly for primary residences, while accurate record-keeping is essential for compliance.
- Given the complexity of capital gains tax regulations, seeking advice from a qualified tax advisor is critical.
Exemptions and Concessions
There are various exemptions and concessions that can potentially reduce the amount of capital gains tax (CGT) you owe. These include;
- Main Residence Exemption: When selling your primary residence, a full exemption from CGT may apply. However, eligibility criteria and specific conditions need to be met.
- 12 Month Discount: Individuals who hold an asset for more than 12 months may be entitled to a CGT discount of 50%. This means only 50% of the capital gain is included in their assessable income.
- Personal use assets costing $10,000 or less are exempt from CGT.
What Is The Cost Base?
To estimate the cost base of your asset, include the incidental costs of acquiring and selling the property, such as real estate agent’s commission, conveyancing fees, stamp duty and other expenses.
Understanding Your Results
For example, let’s say you bought an investment property for $500,000 and sold it after 5 years for $700,000, and your cost base is $50,000.
Using the calculator’s formula (by subtracting purchase price from selling price), your capital gain would be $150,000. As you have held the asset for longer than 12 months, your net capital gain would be $75,000. This is the net capital gain that will be added to the taxable income entered. The total amount will be taxed at the applicable rate.
Calculate Capital Gains Tax on Property
If the property you are selling is your primary residence, you may qualify for a full CGT exemption. If it is an investment property that you have owned for more than 12 months, a 50% discount on the applicable capital gains may apply.
When it comes to investment properties, the calculation of capital gains tax (CGT) involves adding together the initial purchase price and any expenses incurred in maintaining and owning the property. This includes costs such as repairs, agent’s commissions, improvements, and other ownership-related fees that were not previously claimed as deductions.
How to Use the Calculator
To use our Capital Gains Tax Calculator, just input your asset details along with your current taxable income. The calculator will then give an estimated value of your capital gains tax payable based on the given purchase and sale prices, cost base and your income.
Please note that this estimate should not be used to replace professional advice.
Record-Keeping and Reporting Requirements
Properly recording and accurately reporting your capital gains and losses is crucial for both meeting tax regulations and minimising your tax liability.
Documentation should be kept of all transactions, events, or factors that may affect your capital gains or losses when reporting them.
Dealing with Capital Losses
A capital loss occurs when the selling price of an asset or investment is lower than its purchase price. This can be used to offset capital gains in current or future financial years.
It’s important to maintain accurate records as proof of any claimed losses from previous years.
When Do I Pay Capital Gains Tax?
Capital gains tax is not payable as a separate tax. Your net capital gain is added to your assessable income for the year and is payable as part of your tax return for the year.
Can My Conveyancer Advise Me On Capital Gains Tax?
No, your conveyancing solicitor is an expert in the legal intricacies of buying and selling property, but cannot give you tax advice. It is highly recommended that you seek professional advice from a qualified tax agent.
The Australian Taxation Office provides a large amount of information about capital gains tax online.
More Questions?
If you have more questions about buying or selling property, our team of conveyancing solicitors are happy to help.
Contact us on 1300 539 529, through our contact form, or for an obligation free quote, head over to our quote page.
The above is a guide only and does not constitute professional advice.
