The sale of a rental property for more than you originally paid for it will generally mean you will have to pay some capital gains tax. However the amount you pay will be determined by your income tax bracket, other capital gains or losses you may have, your cost base and some other factors that may be specific to the location, type and Government rulings.
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Sale of rental property that was once my home.
In the circumstance where the rental property was once your main residence you may be eligible for a capital gains tax exemption on part or the whole of the profit you make. My advice here is to contact the Tax Office or your private tax professional. In this case having complete records of the purchase and sale of rental property details of your property are paramount. You should also have records of dates when you first rented out your property and a valuation at that time if you had one done.
Capital Gains on Sale Of Rental Property
For your particular situation, I suggest you talk to a professional tax advisor or the Tax Office. However in general, the sale of your investment property will trigger a capital gains event. When this happens you will need to include a capital gains calculation in your end of financial year tax.
You will need to:
Determine the amount of your proceeds from the sale. Determine your cost base. (Your capital gains tax cost base consists of the following: the original purchase price, any costs associated with purchasing it, any costs associated with selling it, e.g. agents’ commissions & legal fees less any depreciation you have claimed on the asset.)
Work Out Capital Gains On Sale of Rental Property
Contact Taxsolvers for a definitive answer on wether or not the sale of your rental property is subject to capital gains tax.
If you have determined your sale is subject to the capital gains tax provisions, you need to work out if you made a gain or a loss.
If your sale proceeds are more than your original purchase cost, plus selling costs and unclaimed expenses, you will generally be subject to capital gains provisions. The net capital gain is added to your taxable income and taxed at your marginal rate. For more on this, see calculating capital gains. A capital loss will not deductible against your ordinary taxable income, but can be used to reduce any other capital gains you make in the year, or any gains in subsequent years. You can carry forward capital losses in your tax indefinitely, but they must be applied to gains when they occur. You will not be able to pick or choose the timing of the application.
Offsetting capital gains tax on the Sale of Rental Property
Your best bet here is to sell all the dud shares or assets that sitting as losses in your investment portfolio in the financial year you intend to sell your rental property. These losses can be used to offset the gain immediatly. Check out this rental property capital gains calculator for an idea on your personal situation.