Understanding Capital Gains Tax – profits and losses
I think it is important to clarify any thoughts you may have about Capital Gains Tax given the property market that we are experiencing at this time.
When the word ‘TAX’ is used people often tend to lump it all into one basket and think that one tax can be written off against another. In the following article from Australian Property Investor you will see how you will need to treat any capital losses that you may have had this year.
“Capital Gains Tax Explained
Capital Gains Tax is a tax charged on any capital gain arising from the sale of any asset acquired after the 19th of August, 1985.
You are liable for Capital Gains Tax if your capital gain exceeds your capital loss in any financial year. Any capital gain must be reflected in your tax return for that year.
You do not pay capital gains tax on your principal place of residence. However, any investment properties are subject to the Capital Gains Tax when sold.
One big misconception with Capital Gains Tax is that it is paid at the top marginal tax rate. This is incorrect. Any capital gain made is added to your other income to give you your taxable income and then taxed at your marginal rate which may not necessarily be the top tax rate.
Another misconception is that in the event a loss is made, that loss can help reduce your taxable income as a negatively geared property would. This is also incorrect. A capital loss can only be offset against a capital gain”
Happy Investing
Filed Under: Investment Strategies • Property Investment • Property Investment Tips • Tax Tips
About the Author: 
