Will I pay capital gains tax and how much.

Question

2 years ago I bought a unit in Melbourne CBD off the plan. It cost $202000 but I only had to pay $20200 as a deposit. The development is nearly complete but I am looking to sell beforehand. Real estate tells me I can probably get about $235000 to sell now. My question is if I sell the unit on before I actually obtain a mortgage on it will I have to pay capital gains tax? Also I would like a rough estimate of how much I will pay. Real estate fees are about 3% of sale price. Based on the above figures and my income is about 63K a year but I am pregnant so will only work for 7 months out of this financial year, plus I get a 17K year pension from the navy. Obviously you can only provide an estimate and that is fine, I’m not after a definitive answer. Thanks

Answer

Yes you still have to pay capital gains but you do qualify for the 50% discount if you bought with the intention of living in it or renting it out (ie plans changed because you are pregnant) as the 12 months starts from the date of contract. If you always intended to resell at a profit rather then hold as a home or investment then you do not get the 50% CGT discount. The caluclation if capital gains applies would be:
Gain $33,000
Less buying & selling cost and
interest on the deposit? And any other
ownership or holding costs – say $8,000
——-
Taxable Gain Gross $25,000
Less any capital losses you may have say 1,000
——-
24,000
Less 50% Discount 12,000
——–
Net capital gain 12,000

Looks like you are going to be in the 31.5% tax bracket which is between $35,000 and $80,000 so the tax would be $3,780

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