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Understanding the capital gains tax for property investment

On Jun 20 2013
Tagged as:
  • Commercial Property


Property investment is wrought with phrases and terms that you'll need to be familiar with to ...

Property investment is wrought with phrases and terms that you'll need to be familiar with to fully understand the market and how to make buying and selling a house work for you.

One such term is the capital gains tax, which applies to income made from residential or commercial real estate, and is therefore treated as taxable income.

You will need to work out your capital gain or loss from any property each tax year, as well as net gains or losses.

To do this, you'll have to start by working out the property's 'cost base', which is generally the price you paid for the property as well as any other costs incurred in acquisition or during the sale, so be sure to keep accurate records of expenditures.

If you have only owned the property for a year or less before you sell it on, then you may be able to reduce the amount of your capital gain by only applying the tax to 50 per cent of the profit.

It is only possible to use capital losses to offset other capital gains for tax purposes however, and not against any other income sources.



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