Capital Gains Tax – Property Valuations

Capital Gains Tax Property Valuation - CGT Event, Australian Valuers

Call Australian Valuers on 1800 664 094 – Property Valuers for Brisbane, Ipswich, Sunshine Coast, Gold Coast, and Northern NSW including Newcastle and Byron Bay.

Property Valuation for Capital Gains Tax Purposes, CGT Event

Australian Valuers – Capital Gains Tax Property Valuations for Brisbane, Sunshine Coast, Gold Coast and Northern NSW regions

The Basics of Capital Gains Tax and Property in Australia

If you own a capital asset, such as real estate or shares and sell it, the you will either make a usually make a capital gain or a capital loss.

All capital gains and losses must be declared in your annual income tax return and you are required to a Capital Gains Tax.

For Australian residents, capital gains tax will apply to assets that are kept anywhere in the world.

What are Capital Gains and Losses?

You make a capital gain when the proceeds you receive when disposing of the asset is greater than what it cost to acquire. A capital loss is the opposite, when the final value of the asset is less than its original cost base.

Real Estate and Capital Gains Tax

Most real estate, such as vacant land, commercial premises, rental properties, holiday houses and hobby farms, is subject to capital gains tax.

However, personal assets such as your principal place of residence (home), car and furniture are exempt from capital gains tax. It also does not apply to depreciating assets, such as business equipment or fittings in a rental property. The most common situation when capital gains tax is calculated is when real estate is sold.

If you’re a co-owner of the property, you’ll make a capital gain or loss proportionate to your ownership in the property.

How are Capital Gains and Losses Calculated?

Correct record keeping is important when it comes to calculating capital gains or losses. Make sure you retain a copy of the purchase contract and all receipts for expenses relating to the purchase. These include stamp duty, legal fees, and property valuation fees.

You will also need to keep a record of all relevant expenses relating to the capital gains tax event (CGT event), for example the sale contract and records of legal fees and stamp duty.

This information forms the basis of the capital gain or loss calculation.

When Do I Need an Independent Property Valuation in a CGT Event?

If you own real estate that was previously exempt from capital gains tax but then becomes subject to capital gains tax, you should seek a valuation at the time of the CGT event.

For example, if you decide to move out of your principal place of residence and turn it into an investment property, you should engage a valuer as soon as it goes on the rental market.

It is possible to do a retrospective valuation, however, it can be inaccurate, time consuming and costly.

Australian Valuers suggests combining a capital gains tax valuation with a Tax Depreciation Schedule, to increase accuracy in calculating the capital gain while minimising your tax obligations on an investment property.

Contact Australian Valuers

Once you have spoken to your accountant or financial advisor and wish to find out more about how Australian Valuers can assist you in a property valuation for Capital Gains Tax purposes, please contact us on 1800 664 094, or email at admin@australianvaluers.com.au.

References:

“Capital Gains Tax”Website. Australian Government – Australian Taxation Office. 24 Oct 2017. Retrieved 10 Apr 2018.